You are getting ready to start a new project that will incur some cleanup and shutdown costs when it is completed. The project costs $5 million upfront and is expected to generate $2 million per year for ten years and then have some shutdown costs in year 11. Find the maximum shutdown costs you could incur and still meet your cost of capital of 10% on this project.

When you search it you get the same question with different numbers.

Explanation:

Just look at what they do and learn from it

a deferred gain

Explanation:

Deferred gain occurs when the recipient of the proceeds or profits from a transaction do not collect it all upfront. Some of the gain is not collected now but deferred to some future time.

It is referred to as unrealised revenue and is represented on the balance sheet as a liability.

In the given scenario Jamar Co. sold its headquarters building at a gain, and simultaneously leased back the building. This means not all the gains from the sale are received now.

So this is a deferred gain.