APB opinion 21

A company had a land that cost $ 2000 in 1985 for example; the market value of the land in 2006 is $ 20000, the buyer signed in the year 2006 a note for $ 40000 due in 5 years.The selling company would recognize a gain of ( $40000 - $2000 ) $ 38000 in the year of sale, but APB 21 opinion requires that the gain of sale of the land is ( $20000 - $2000 ) $18000 to be recognized in the year of sale, and the rest to be considered as deferred interest income, the interest should be computed either by using present value tables or by market value of exchange.

Waleed Tibi
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