26. At the beginning of current year, Steven Company sold a building with remaining useful life of 30 years and immediately leased it back for 5 years.

Sale price at below fair value 18,000,000

Fair value of building 20,000,000

Carrying amount of building 24,000,000

Annual rental payable at the end of each year 1,000,000

Implicit interest rate 12%

Present value of an ordinary annuity of 1 at 12%

For 5 periods 3.60

1.What is the initial lease liability?

a. 3,600,000

b. 4,000,000

c. 4,800,000

d. 0

2.What is the cost of right of use of asset?

a. 3,000,000

b. 2,880,000

c. 5,760,000

d. 6,720,000

3.What is the loss on right transferred?

a. 4,000,000

b. 2,880,000

c. 4,320,000

d. 6,000,000

4.What is the net annual rent income of the buyer-lessor?

a. 400,000

b. 200,000

c. 300,000

d. 100,000