On January 1,2014,J

question 24

Essay

On January 1,2014,J.M.Rodriguez,owner of JMR Sound,sold the building the studio currently occupies to Rave Up Events Company for the current market value of the building of $9,000,000.Prior to the sale,the carrying value of the building was $7,000,000.The estimated remaining useful life of the building is 10 years,with no residual value at that time.Straight-line depreciation is used to depreciate the building.
On the same day as the sale,January 1,2014,Rodriguez signed a 10-year noncancelable leaseback agreement that has a 15 percent implicit rate of return for the lessor.The lessee's incremental borrowing rate also is 15 percent.Annual payments begin on January 1,2014.During 2014,Rodriguez will pay $10,000 executory costs if the transaction qualifies as a direct-financing lease.If the agreement qualifies as an operating lease,this $10,000 will be paid by the buyer-lessor.For convenience,provide all amounts in your solution in $000.
Required:

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Definitions:

Neural Crest Cells

A group of cells in vertebrate embryos that migrate to form diverse cell types, including neurons, glial cells, and connective tissue.

Enteric Neurons

Neurons that are part of the enteric nervous system, which governs the function of the gastrointestinal system.

Adrenal Medulla

The inner section of the adrenal gland that secretes adrenaline and noradrenaline, playing a role in the body's fight-or-flight response.

Decussation

The crossing over of nerve fibers or pathways in the brain or spinal cord, allowing for the transmission of signals from one side of the body to the opposite side.