Using the following information answer questions a and b below. On January 1, 2015 Company A sold an old building with a basis of $370,000 to Company B in exchange for an $875,000 note. The note has a coupon rate of 5%, pays interest annually and is due on December 31, 2017. Company B’s cost of capital or market rate of interest is 6%.
What was the amount of Company A’s gain or (loss) on the sale of the old building on January 1, 2015? (if using a financial calculator to determine fair market value, show and label inputs used)
Show the amounts and affect [increase or decrease] on Company’s balance sheet equation ASSETS – LIABILITIES + SHAREHOLDERS’ EQUITY for the sale of the plant building on January 1, 2015.