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Problem 6. Sales and Leaseback On Januar y 1 20x1, Entity sold a building to Entity Y and simultaneously leased it back. Additional information follows: Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale.

Problem 6. Sales and Leaseback On Januar y 1 20x1, Entity sold a building to Entity Y and simultaneously leased it back. Additional information follows: Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale.

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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ANSWER ONLY JOURNAL ENTRIES!

ANSWER ONLY JOURNAL ENTRIES!

ANSWER ONLY JOURNAL ENTRIES!

Question:

If the sales price is P1,000,000 which is equal to fair value compute the following under the buyer-lessor accounting

    1. Gross Investment
    2. Net Investment
    3. Unearned Interest Income
    4. Journal entries on January 1, 20x1
Problem 6. Sales and Leaseback On Januar y 1 20x1, Entity sold a building to Entity Y and simultaneously leased it back. Additional information follows: Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale.
Transcribed Image Text:Problem 6. Sales and Leaseback On Januar y 1 20x1, Entity sold a building to Entity Y and simultaneously leased it back. Additional information follows: Fair value of building 1,000,000 Carrying amount of building 800,000 Remaining useful life of building 10 years Lease Term 5 years Annual rent payable at the end of each year 100,000 Implicit interest rate equal to market rate 12% The transfer qualifies as a sale.
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