At the beginning of the current year, Simson Company sold a building with remaining life of $20$ years and leased it back for $5$ years.

Sales price above fair value $20,000,000$

Fair value of building $18,000,000$

Carrying amount of building $10,800,000$

Annual rental payable at the end of each year $1,500,000$

Implicit interest rate $12\%$

Round present value at nearest hundredth

$-$ What amount should be reported as initial lease liability?

a$.5,400,000$

b$.3,400,000$

c$.7,500,000$

d$.7,400,000$

$-$ What amount should be reported as cost of the right of use asset?

a$.2,040,000$

b$.4,000,000$

c$.2,000,000$

d$.3,000,000$

$-$ What amount should be reported as gain on right transferred to the buyer$-$lessor?

a$.7,200,000$

b$.1,500,000$

c$.5,600,000$

d$.5,840,000$

$-$ What is the gross rental income of the buyer$-$lessor?

a$.1,500,000$

b$.2,000,000$

c$.944,444$

d$.555,556$

$-$ What is the depreciation expense of the buyer$-$lessor?

a$.1,000,000$

b$.1,500,000$

c$.900,000$

d$.500,000$

$-$ What is the total net effect in the profit$/$loss of the buyer$-$lessor?

a$.284,444$

b$.944,444$

c$.240,000$

d$.900,000$

$-$ How much is the total asset, net of depreciation of the buyer$-$lessor?

a$.284,444$

b$.944,444$

c$.240,000$

d$.900,000$