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What is the transaction price for the land

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Question: Bill Amends, owner of Marigold Estate Inc., buys and sells commercial properties. Recently, he sold land for $3,170,000 to the Blackhawk Group, a developer that plans to build a new shopping mall. In addition to the $3,170,000 sales price, Blackhawk Group agrees to pay Marigold Estate Inc. 1% of the retail sales of the mall for 10 years. Blackhawk estimates that retail sales in a typical mall project is $940,000 a year. Given the substantial increase in online sales that are occurring in the retail market, Bill had originally indicated that he would prefer a higher price for the land instead of the 1% royalty arrangement and suggested a price of $3,445,000. However, Blackhawk would not agree to those terms.

What is the transaction price for the land and related royalty payment that Marigold Estate Inc. should record?

Reference no: EM132752254

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