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hen immediately signed 99,057, due at the start o n of the lease. HMD's imp

hen immediately signed 99,057, due at the start o n of the lease. HMD's imp

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Blossom Corporation owned a manufacturing facility. Blossom had purchased the building for $11,400,000, and had recorded S5,040,000 depreciation on the facility. On January 1, 2020, Blossom sold the building to HMD Ltd. for $7,416,000, and then immediately signed a 35-year agreement to lease back the building for annual payments of $699,057, due at the start of each year. Title to the building would return to Blossom at the conclusion of the lease. HMD's implied interest rate, which was known to Blossom, was 10%. What are the values for the attached journal entries. Thanks! Dec. 31, 2020 Deferred Profit on Sale-Leaseback Depreciation Expense (To record amortization of deferred gross profit.) Dec. 31, 2020 Interest Expense Obligations under Lease (To record interest.)
Transcribed Image Text:Blossom Corporation owned a manufacturing facility. Blossom had purchased the building for $11,400,000, and had recorded S5,040,000 depreciation on the facility. On January 1, 2020, Blossom sold the building to HMD Ltd. for $7,416,000, and then immediately signed a 35-year agreement to lease back the building for annual payments of $699,057, due at the start of each year. Title to the building would return to Blossom at the conclusion of the lease. HMD's implied interest rate, which was known to Blossom, was 10%. What are the values for the attached journal entries. Thanks! Dec. 31, 2020 Deferred Profit on Sale-Leaseback Depreciation Expense (To record amortization of deferred gross profit.) Dec. 31, 2020 Interest Expense Obligations under Lease (To record interest.)
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