A profit of $900,000 on the combined sale was reported to the Security Exchange Commission.  But the Eldorado did not report any transactions or compensation with its manager.    But there is a twist or two.

 

The profit

the Downing’s 30% had a book value of $480,000.  the profit on that sale was $1,770,000.


The loss

The book value of the managers acquired land was $1,120,000.  The loss on that sale was        -$870,000.

Manager paid         $ 250,000

Downings paid      $2,250,000

Eldorado got        $2,500,000

book value              $1,600,000

reported profit     $   900,000

Profit on 30%      $1,770,000

loss on the 70%   $  870,000



reported profit     $   900,000

 
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