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

question 30

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.
-As a result of the sale and leaseback transaction in 2008,what is the difference between income between reporting using US GAAP and IFRSs in 2008?

• A)US GAAP income is $80,000 higher.
• B)US GAAP income is $100,000 higher.
• C)IFRSs income is $50,000 lower.
• D)IFRSs income is $100,000 lower.
• E)IFRSs income is $80,000 higher.

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