At the beginning of current year, an entity sold building with remaining useful life of 25 years and immediately leased it back for 5 years.Sale price at fair value20,000,000Carrying amount of building24,000,000Annual rental payable at the end of each year1,000,000Implicit interest rate12%Present value of an ordinary annuity of 1 at 12% for 5 periods3.60 What is the cost of right of use asset? What is annual depreciation of the right of use asset? What is the loss on right transferred? What amount of net rental income should be reported by the lessor?

INTRODUCTION Cost of right of use asset: During the term of the lease, a lessee has the right to…

Answered: for 5 years. Sale price at fair value…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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At the beginning of current year, an entity sold building with remaining useful life of 25 years and immediately leased it back for 5 years.

Sale price at fair value	20,000,000
Carrying amount of building	24,000,000
Annual rental payable at the end of each year	1,000,000
Implicit interest rate	12%
Present value of an ordinary annuity of 1 at 12% for 5 periods	3.60

What is the cost of right of use asset?

What is annual depreciation of the right of use asset?

What is the loss on right transferred?

What amount of net rental income should be reported by the lessor?

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