Splish Corporation owned a manufacturing facility. Splish had purchased the building for $9,600,000, and had recorded...

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Splish Corporation owned a manufacturing facility. Splish had purchased the building for $9,600,000, and had recorded $3,120,000 depreciation on the facility. On January 1,2020, Splish sold the building to HMD Ltd. for $7,380,000, and then immediately signed a 20-year agreement to lease back the building for annual payments of $695,990, due at the start of each year, Title to the building would return to Splish at the conclusion of the lease. HMD's implied interest rate, which was known to Splish, was 8%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries to be recorded by Splish for the 2020 fiscal year (assuming a December 31 year-end, and that Splish follows ASPE). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, eg 5,275. Round factor values to 5 decimal places, eg. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Jan. 1, 2020 (To record sale of building.) (To record inception of lease.) (Torecord lease payment.) Dec. 31, 2020 (To record depreciation expense.) Dec. 31, 2020v Deferred Profit on Sale-Leaseback Depreciation Expensel (To record amortization of deferred gross profit.) Dec 31.2020 Interest Expense Obligations under Lease (To record interest.) Splish Corporation owned a manufacturing facility. Splish had purchased the building for $9,600,000, and had recorded $3,120,000 depreciation on the facility. On January 1,2020, Splish sold the building to HMD Ltd. for $7,380,000, and then immediately signed a 20-year agreement to lease back the building for annual payments of $695,990, due at the start of each year, Title to the building would return to Splish at the conclusion of the lease. HMD's implied interest rate, which was known to Splish, was 8%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries to be recorded by Splish for the 2020 fiscal year (assuming a December 31 year-end, and that Splish follows ASPE). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, eg 5,275. Round factor values to 5 decimal places, eg. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Jan. 1, 2020 (To record sale of building.) (To record inception of lease.) (Torecord lease payment.) Dec. 31, 2020 (To record depreciation expense.) Dec. 31, 2020v Deferred Profit on Sale-Leaseback Depreciation Expensel (To record amortization of deferred gross profit.) Dec 31.2020 Interest Expense Obligations under Lease (To record interest.)

Answer rating: 100% (QA)

Answer Date Account Title and Explanation Debit Credit Jan 1 ... View the full answer