A Company Sells a Building to a Bank in 2011

question 49

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.
-What amount should be recognized in 2011 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. Under U.S. GAAP the gain is recognized over the life of the lease. The gain for 2011 is 100,000/5= 20,000.

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Exchange Rate

The value of one currency for the purpose of conversion to another, indicating how much of one currency can be exchanged for another.

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Products and commodities that are manufactured or produced within the United States.

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A period during the summer months where individuals take a break from work or school activities, often involving travel or leisure activities.