Land contract accounting question

Mar 29, 2005 1 Replies
J

I got a little conundrum for you, its called find the asset:


Situation:



I have a contract to buy a piece of land for $50,000, but I also have a contract to sell that same piece of land for $100,000.



1.. Do I have an asset? 2.. If yes, what is its value? The options I see are the face of the contract, or the net of both of the contracts. Any ideas or at least where would I look?

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P

"Joker" wrote

If all you have is the contract, then is the question: "Is the contract an asset?"

If you can sell the contract, then it most likely is an asset.

The value of the contract and you cost basis are two different things.

The "value" of the contract to buy is most likely $50k....less closing costs, taxes and the time value of money (the time between buying and selling the property).

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