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Sol purchased land as an investment on January 12, 2011 for $85,000. On January 31, 2017, Sol sold the land for $30,000 cash. In addition, the purchaser assumed the mortgage of $70,000 on the land. What is the amount of the realized gain or loss on the sale? a. $15,000 gain b. $65,000 loss c. $90,000 gaind. $5,000 gain e. None of these choices are correct.

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Answer:

$15,000

Explanation:

Realized gain is the profit that is exceeded from the expense for a particular years. Realized loss is the loss that resulted from the excessive expense.

To determine the net realizable gain or loss, we can use the following formula -

Realizable Gain (loss) = Sale amount of tangible assets + mortgage purchasing - purchase price

Given,

Sale amount of tangible assets = $30,000

purchase price = $85,000

mortgage purchasing = $70,000

Putting the value into the formula, we can get-

Realizable Gain (loss) = $30,000 - $70,000 - $85,000

Therefore, Realizable Gain (loss) = $15,000

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