Carla Vista Corporation owned a manufacturing facility. Carla Vista had purchased the building for $10,080,000, and had recorded $3,000,000 depreciation on the facility. On January 1, 2023, Carla Vista sold the building to Sandhill Ltd. for $7,980,000, and then Immediately signed a 25-year agreement to lease back the building for annual payments of $799,219, due at the start of each year. Title to the building would return to Carla Vista at the conclusion of the lease. Sandhill's implied interest rate, which was known to Carla Vista, was 10%. Prepare the journal entries to be recorded by Carla Vista for the 2023 fiscal year and January 1, 2024 payment (assuming a December 31 year-end, and that Carla Vista follows ASPE). (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not Indent manually. Round answers to 0 decimal places, eg. 5,275. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Jan. 1, 2023 V Cash Jan. 1, 2023 Jan. 1,2023 Dec. 31,2023 Dec. 31, 2023 Dec. 31, 2023 Jan. 1, 2024 Accumulated Depreciation-Buildings Buildings Deferred Profit on Sale-Leaseback (To record sale of building) Right-of-Use Asset Lease Liability (To record inception of lease) Lease Liability Cash (To record lease payment) Depreciation Expense Accumulated Depreciation-Leased Buildings (To record depreciation expense) (To record amortization of deferred gross profit) Interest Expense Cash (To record interest) Lease Liability Cash (To record lease payment) Debit 7980000 3000000 7080000 799219 283200 628078 799219 Credit 10080 900 7980 799 2821 718 799
Carla Vista Corporation owned a manufacturing facility. Carla Vista had purchased the building for $10,080,000, and had recorded $3,000,000 depreciation on the facility. On January 1, 2023, Carla Vista sold the building to Sandhill Ltd. for $7,980,000, and then Immediately signed a 25-year agreement to lease back the building for annual payments of $799,219, due at the start of each year. Title to the building would return to Carla Vista at the conclusion of the lease. Sandhill's implied interest rate, which was known to Carla Vista, was 10%. Prepare the journal entries to be recorded by Carla Vista for the 2023 fiscal year and January 1, 2024 payment (assuming a December 31 year-end, and that Carla Vista follows ASPE). (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not Indent manually. Round answers to 0 decimal places, eg. 5,275. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Jan. 1, 2023 V Cash Jan. 1, 2023 Jan. 1,2023 Dec. 31,2023 Dec. 31, 2023 Dec. 31, 2023 Jan. 1, 2024 Accumulated Depreciation-Buildings Buildings Deferred Profit on Sale-Leaseback (To record sale of building) Right-of-Use Asset Lease Liability (To record inception of lease) Lease Liability Cash (To record lease payment) Depreciation Expense Accumulated Depreciation-Leased Buildings (To record depreciation expense) (To record amortization of deferred gross profit) Interest Expense Cash (To record interest) Lease Liability Cash (To record lease payment) Debit 7980000 3000000 7080000 799219 283200 628078 799219 Credit 10080 900 7980 799 2821 718 799
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Transcribed Image Text:Carla Vista Corporation owned a manufacturing facility. Carla Vista had purchased the building for $10,080,000, and had recorded
$3,000,000 depreciation on the facility. On January 1, 2023, Carla Vista sold the building to Sandhill Ltd. for $7,980,000, and then
Immediately signed a 25-year agreement to lease back the building for annual payments of $799,219, due at the start of each year.
Title to the building would return to Carla Vista at the conclusion of the lease. Sandhill's implied interest rate, which was known to
Carla Vista, was 10%.
Prepare the journal entries to be recorded by Carla Vista for the 2023 fiscal year and January 1, 2024 payment (assuming a December
31 year-end, and that Carla Vista follows ASPE). (List all debit entries before credit entries. Credit account titles are automatically indented
when the amount is entered. Do not Indent manually. Round answers to 0 decimal places, eg. 5,275. If no entry is required, select "No entry" for
the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.)
Date
Account Titles and Explanation
Jan. 1, 2023
V
Cash
Jan. 1, 2023
Jan. 1,2023
Dec. 31,2023
Dec. 31, 2023
Dec. 31, 2023
Jan. 1, 2024
Accumulated Depreciation-Buildings
Buildings
Deferred Profit on Sale-Leaseback
(To record sale of building)
Right-of-Use Asset
Lease Liability
(To record inception of lease)
Lease Liability
Cash
(To record lease payment)
Depreciation Expense
Accumulated Depreciation-Leased Buildings
(To record depreciation expense)
(To record amortization of deferred gross profit)
Interest Expense
Cash
(To record interest)
Lease Liability
Cash
(To record lease payment)
Debit
7980000
3000000
7080000
799219
283200
628078
799219
Credit
10080
900
7980
799
2821
718
799
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