REFERENCE: Ref.11_05 A Company Sells a Building to a Bank in 2008

question 39

Multiple Choice

REFERENCE: Ref.11_05
A company sells a building to a bank in 2008 at a gain of $100,000 and immediately leases the building back for period of five years.The lease is accounted for as an operating lease.The building was originally purchased for $200,000 and currently has a book value of $50,000.
-What amount should be recognized in 2008 as a gain on the sale using U.S.GAAP?

• A)$20,000.
• B)$50,000.
• C)$100,000.
• D)$150,000.
• E)$200,000.

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Definitions:

Inadvertently Omitted

Accidentally left out or not included, typically referring to information or details that were missed unintentionally.

Depreciation Expense

The allocation of the cost of a tangible fixed asset over its useful life, reflecting the decrease in value over time.

Balance Sheet

A statement presenting a snapshot of a company’s financial position, including assets, liabilities, and shareholders’ equity.

Related Asset

An asset that is connected or associated with another asset in a business, often through ownership or use in similar processes.