Central Purchasing Lid. (CPL) owns the building it uses; it had an original cost of $8,456,000 and accumulated depreciation of $2,536,800 as of 1 January 20X2. On this date, the building (but not the land) was sold to a real estate investment trust (REIT) for $7,956,000, which also was the building's fair value, and simultaneously leased back to CPL. The lease has a 15-year term and required payments on 31 December of each year. The payments are $706,000 with no transfer of title or purchase option. CPL will pay all of the building's operating and maintenance costs including property taxes and insurance. CPL's incremental borrowing rate is 9%. The building is being depreciated straight-line with a full year's depreciation in the year of acquisition. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Prepare entries for CPL to record the sale and leaseback of the building. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.) Answer is complete and correct. No Transaction General Journal Debit Credit 1 1 Cash 7,956,000 Accumulated depreciation, building 2,536,800 Right-of-use asset - building 4,233,944 Building 8,456,000 Lease liability 5,690,847 Gain on sale and leaseback 579,8972. Prepare year-end adjusting entries for 20X2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the intermediate and final answers to the nearest whole dollar amount.) Answer is complete and correct. No Transaction General Journal Debit Credit 1 1 Interest expense 512, 176 Lease liability 512, 176 2 2 Lease liability 706,000 Cash 706,000 3 3 Depreciation expense, right-of-use asset 282,263 Accumulated depreciation, right-of-use asset 282,263 3-a. Show how all amounts related to the sale and leaseback will be presented on the statement of financial position in 20X2. (Round the intermediate and final answers to the nearest whole dollar amount.) * Answer is complete but not entirely correct. Statement of Financial Position (Partial) Fixed assets: Building as right-of-use asset 4,233,944 Less: Accumulated depreciation 282,263$ 3,951,681 Short-term liabilities: Current portion of long-term lease liability (266,238) X Long-term liabilities: Lease liability 5,497,023 Less: Current portion (266,238) x 5,230,7852. Prepare year-end adjusting entries for 20X2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round the intermediate and final answers to the nearest whole dollar amount.) Answer is complete and correct. No Transaction General Journal Debit Credit 1 1 Interest expense 512, 176 Lease liability 512, 176 2 2 Lease liability 706,000 Cash 706,000 3 3 Depreciation expense, right-of-use asset 282,263 Accumulated depreciation, right-of-use asset 282,263 3-a. Show how all amounts related to the sale and leaseback will be presented on the statement of financial position in 20X2. (Round the intermediate and final answers to the nearest whole dollar amount.) * Answer is complete but not entirely correct. Statement of Financial Position (Partial) Fixed assets: Building as right-of-use asset 4,233,944 Less: Accumulated depreciation 282,263$ 3,951,681 Short-term liabilities: Current portion of long-term lease liability (266,238) X Long-term liabilities: Lease liability 5,497,023 Less: Current portion (266,238) x 5,230,785