Problem 3 At the beginning of the current year, CBX Company sold a building with remaining life of 20 years and immediately leased it back for 5 years. Sales price at above fair value Fair value of building Carrying amount of building Annual rental payable at the end of each year Implicit interest rate Present value of an ordinary annuity of 1 at 12% for five periods 20,000,000 18,000,000 10,800,000 1,500,000 12% 12% 1. What amount should be reported as initial lease liability? 2. What amount should be recognized as cost of right of use asset? 3. What amount should be reported as gain on right transferred to the buyer-lessor? 4. What amount should be recognized as gross rental income of the buyer-lessor? 5. What amount should be recognized as depreciation of the building of the buyer-lessor?
Problem 3 At the beginning of the current year, CBX Company sold a building with remaining life of 20 years and immediately leased it back for 5 years. Sales price at above fair value Fair value of building Carrying amount of building Annual rental payable at the end of each year Implicit interest rate Present value of an ordinary annuity of 1 at 12% for five periods 20,000,000 18,000,000 10,800,000 1,500,000 12% 12% 1. What amount should be reported as initial lease liability? 2. What amount should be recognized as cost of right of use asset? 3. What amount should be reported as gain on right transferred to the buyer-lessor? 4. What amount should be recognized as gross rental income of the buyer-lessor? 5. What amount should be recognized as depreciation of the building of the buyer-lessor?
Financial Accounting Intro Concepts Meth/Uses
14th Edition
ISBN:9781285595047
Author:Weil
Publisher:Weil
ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications
Section: Chapter Questions
Problem 28E
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning