"The company that Sensor sold the stock to, Greenco, is having their own cash flow...
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"The company that Sensor sold the stock to, Greenco, is having their own cash flow problems right now. They couldn't afford to give Sensor cash, so Sensor accepted a non-interest bearing note due in 5 years. Although Sensor won't see the cash for five years, since the title to the stock has passed to the new owners, it can record the gain on the sale." Sensor was carrying the investment at $5,100,000 and sold it to Greenco for $8,000,000. So they booked a $2,900,000 gain on the transaction. a. Recreate the journal entry that Sensor made when it sold the stock to Greenco. How much gain was recognized on the sale of the stock? How much cash inflow did this transaction create for Sensor? b. Calculate the present value of the note receivable using a 15% interest rate. Using the present value of the note as the only economic benefit received, recalculate the gain or loss on the transaction.
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