A Company Sells a Building to a Bank in 2011

question 55

Multiple Choice

A company sells a building to a bank in 2011 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 had a book value of $50,000 at the date of the sale. As a result of the sale and leaseback transaction in 2011, what is the difference between income using U.S. GAAP and IFRS in 2011?

• A) U.S. GAAP income is $80,000 higher.
• B) U.S. GAAP income is $100,000 higher.
• C) IFRS income is $50,000 lower.
• D) IFRS income is $100,000 lower.
• E) IFRS income is $80,000 higher.

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Definitions:

Risky Behavior

Actions that expose individuals to danger or harm, often with a disregard for the negative consequences.

Gray Matter

The darker tissue of the brain and spinal cord, consisting mainly of nerve cell bodies and branching dendrites.

Frontal Lobes

Regions of the brain located at the front of each cerebral hemisphere, responsible for decision making, problem solving, control of purposeful behaviors, consciousness, and emotions.

Myelination

The process of forming a myelin sheath around the nerves, improving the speed and efficiency of electrical impulses.