On January 1, 2010, Columbus Properties Sold a Building to Another

question 49

Multiple Choice

On January 1, 2010, Columbus Properties sold a building to another company and immediately leased it back again.The Columbus' book value for the building was $15, 954.The lease was for five years with $5, 000 payable at the end of each year.The payments, discounted at 10%, equaled $18, 954.Which entry would Columbus Properties not make in 2010?

• A)
• \(\begin{array} { l }
• \text { Depreciation Expense: Leased Asset } \quad 3,790 \\
• \text { Accumulated Depreciation: } \\
• \text { Leased Asset } \quad \quad3,790 \\
• \end{array}\)
• B)
• \(\begin{array} { l r }
• \text { Cash } & 18,954 \\
• \text { Building } & 15,954 \\
• \text { Profit on Sale-Leaseback } & 3,000
• \end{array}\)
• C)
• Leased Equipment Under Capital Leases \(\quad 18,954\)
• Obligation Under Capital Leases \(\quad 18,954\)
• D)
• \(\begin{array} { l c }
• \text { Obligation Under Capital Leases } & 3,105 \\
• \text { Interest Expense } & 1,895 \\
• \text { Cash } & 5,000
• \end{array}\)

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