ABC Company sells a building to DEF Company. At the same time, ABC Company enters into...
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ABC Company sells a building to DEF Company. At the same time, ABC Company enters into a contract with DEF Company for the right to use the building. Data relating to the sale and leaseback are as follows: Selling price Carrying amount Annual lease payment 2,000,000 2,150,000 120,000 Implicit rate Lease term 5% 10 years Required: Prepare all the necessary entries on the part of Seller-Lessee and Buyer-Lessor and answer the following: CASE NO. 1 Assuming fair value of the asset is #2,000,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee How much is the initial cost of the rights of use asset to be recognized by the lessee? CASE NO. 2 Assuming fair value of the asset is $1,800,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee? How much is the initial cost of the rights of use asset to be recognized by the lessee? CASE NO. 3 Assuming fair value of the asset is $2,100,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee? How much is the initial cost of the rights of use asset to be recognized by the lessee? ABC Company sells a building to DEF Company. At the same time, ABC Company enters into a contract with DEF Company for the right to use the building. Data relating to the sale and leaseback are as follows: Selling price Carrying amount Annual lease payment 2,000,000 2,150,000 120,000 Implicit rate Lease term 5% 10 years Required: Prepare all the necessary entries on the part of Seller-Lessee and Buyer-Lessor and answer the following: CASE NO. 1 Assuming fair value of the asset is #2,000,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee How much is the initial cost of the rights of use asset to be recognized by the lessee? CASE NO. 2 Assuming fair value of the asset is $1,800,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee? How much is the initial cost of the rights of use asset to be recognized by the lessee? CASE NO. 3 Assuming fair value of the asset is $2,100,000 How much is the gain (or loss) on rights transferred to be recognized by the lessee? How much is the initial cost of the rights of use asset to be recognized by the lessee?
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SellerLessee Entries 1 To record the sale of the building Debit Cash 2000000 Credit Building 2150000 Credit Gain on Sale 150000 2 To record the leaseb... View the full answer
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Posted Date:
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