A Company Sells a Building to a Bank in 2011

question 12

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.
-Assume the seller of the building is a U.S. company that is preparing to convert from U.S. GAAP to IFRS. At December 31, 2012, with regard to the sale and leaseback accounting, what amount would reconcile stockholders' equity from U.S. GAAP to IFRS at December 31, 2012?

• A) Increase $40,000.
• B) Decrease $40,000.
• C) Decrease $60,000.
• D) Increase $60,000.
• E) No amount would be necessary for reconciliation. U.S. GAAP has recognized $20,000 en each of two years to total $40,000 and reconciliation would need $60,000 more to attain the $100,000 amount that would be recognized to date under IFRS.

---

Definitions:

Brain Waves

Electrical impulses in the brain that are visible on an electroencephalogram (EEG), indicative of different states of consciousness.

Sleep Stages

The different phases of sleep that a person goes through in a cycle, including REM (rapid eye movement) and various degrees of non-REM sleep.

Eye Movements

The voluntary or involuntary movement of the eyes, which can include blinking, and movements to follow visual objects or read.

Sleep Stages

The different phases of sleep that a person goes through in a typical night, including REM and multiple stages of non-REM sleep, each having distinct characteristics.