A Company Sells a Building to a Bank in 2011

question 8

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 2012?

• A) $0.
• B) U.S. GAAP income is $20,000 higher.
• C) IFRS income is $80,000 lower.
• D) IFRS income is $60,000 lower.
• E) IFRS income is $80,000 higher.

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Definitions:

Least Effective

Refers to processes, strategies, or actions that yield the poorest results compared to alternatives.

Empowerment

Empowerment refers to the process of giving individuals or groups the authority, confidence, and skills needed to take control of their own destiny and make decisions.

Visible Rewards

Tangible, observable rewards given to members of an organization for their work effort or performance, serving as motivation for continued or improved performance.

Empowered

Having the confidence and ability to make decisions and take actions autonomously, often leading to a sense of control and efficacy in one's role.