Ivanhoe Corporation owned a manufacturing facility. Ivanhoe had purchased the building for $9, 960, 000, and had recorded $3,840,000 depreciation on the facility. On January 1, 2023, Ivanhoe sold the building to Oriole Ltd. for $7,020,000, and then immediately signed a 35-year agreement to lease back the building for annual payments of $557,721, due at the start of each year. Title to the building would return to Ivanhoe at the conclusion of the lease. Oriole's implied interest rate, which was known to Ivanhoe, was 8%. Prepare the journal entries to be recorded by Ivanhoe for the 2023 fiscal year and January 1, 2024 payment (assuming a December 31 year-end, and that Ivanhoe follows ASPE). (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select " No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) (To record sale of building) (To record inception of lease) (To record depreciation expense) (To record amortization of deferred gross profit) (To record interest) (To record lease payment)
Ivanhoe Corporation owned a manufacturing facility. Ivanhoe had purchased the building for $9, 960, 000, and had recorded $3,840,000 depreciation on the facility. On January 1, 2023, Ivanhoe sold the building to Oriole Ltd. for $7,020,000, and then immediately signed a 35-year agreement to lease back the building for annual payments of $557,721, due at the start of each year. Title to the building would return to Ivanhoe at the conclusion of the lease. Oriole's implied interest rate, which was known to Ivanhoe, was 8%. Prepare the journal entries to be recorded by Ivanhoe for the 2023 fiscal year and January 1, 2024 payment (assuming a December 31 year-end, and that Ivanhoe follows ASPE). (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select " No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) (To record sale of building) (To record inception of lease) (To record depreciation expense) (To record amortization of deferred gross profit) (To record interest) (To record lease payment)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 11E: On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an...
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Transcribed Image Text:Ivanhoe Corporation owned a manufacturing facility. Ivanhoe had purchased the building for $9,960, 000, and had recorded $3,840,000 depreciation on the
facility. On January 1, 2023, Ivanhoe sold the building to Oriole Ltd. for $7,020,000, and then immediately signed a 35-year agreement to lease back the
building for annual payments of $557,721, due at the start of each year. Title to the building would return to Ivanhoe at the conclusion of the lease. Oriole's
implied interest rate, which was known to Ivanhoe, was 8%. Prepare the journal entries to be recorded by Ivanhoe for the 2023 fiscal year and January
1, 2024 payment (assuming a December 31 year - end, and that Ivanhoe follows ASPE). (List all debit entries before credit entries. Credit account titles are
automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5, 275. If no entry is required, select "
No entry" for the account titles and enter 0 for the amounts. Record journal entries in the order presented in the problem.) (To record sale of building) (To
record inception of lease) (To record depreciation expense) (To record amortization of deferred gross profit) (To record interest) (To record lease payment)
Transcribed Image Text:(To record depreciation expense)
(To record amortization of deferred gross profit)
(To record interest)
(To record lease payment)
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