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Charlie Moore, owner of Sunland Estate Inc., buys and sells commercial properties. Recently, he sold land for $3,110,000 to the Bramble Group, a developer that plans to build a new shopping mall. In addition to the $3,110,000 sales price, Bramble Group agrees to pay Sunland Estate Inc. 1% of the retail sales of the mall for 10 years. Bramble estimates that retail sales in a typical mall project is $1,060,000 a year. Given the substantial increase in online sales that are occurring in the retail market, Charlie had originally indicated that he would prefer a higher price for the land instead of the 1% future-sales-based arrangement and suggested a price of $3,385,000. However, Bramble would not agree to those terms. What is the transaction price for the land and related royalty payment that Sunland Estate Inc. should record?
Sagot :
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