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Show your calculations, please. Buffalo Corporation owned a manufacturing facility. Buffalo had purchased the building for $11,400,000, and had recorded $5,040,000 depreciation on the facility.
Show your calculations, please.
Buffalo Corporation owned a manufacturing facility. Buffalo had purchased the building for $11,400,000, and had recorded $5,040,000 depreciation on the facility. On January 1, 2020, Buffalo sold the building to HMD Ltd. for $7,416,000, and then immediately signed a 35-year agreement to lease back the building for annual payments of $699,057, due at the start of each year. Title to the building would return to Buffalo at the conclusion of the lease. HMD's implied interest rate, which was known to Buffalo, a was 10% Click here to view the factor table PRESENT VALUE OF 1 Click here to view the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries to be recorded by Buffalo for the 2020 fiscal year (assuming a December 31 year-end, and that Buffalo follows ASPE). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, eg, 5,275. Round factor values to 5 decimal places, e.g. 1.25124. If no entry is required, select "No entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit 1, 2020 Accumulated Depreciation - Buildings 7416000 Depreciation Expense 504000 Buildings 11400000 Sales Revenue 3480000 (To record sale of building.) n. 1.2020 Right-of-Use Asset 7415995 Lease Liability 7415995 (To record inception of lease.) (To record sale of building.) n. 1, 2020 Right-of-Use Asset 7415995 Lease Liability 7415995 (To record inception of lease.) n. 1, 2020 Lease Liability 699057 Cash 699057 (To record lease payment.) 31, 2020 Depreciation Expense 211886 Right-of-Use Asset 211886 (To record depreciation expense.) (To record amortization of deferred gross profit.) DI ME II (To record interest.) (To record sale of building.) 7415995 Jan 1.2020 Right-of-Use Asset Lease Liability (To record inception of lease.) Jan 1.2020 Lease Liability 699057 Cash 6 (To record lease payment.) Dec. 31, 2020 Depreciation Expense 211886 Right-of-Use Asset 21 (To record depreciation expense.) II IC LE (To record amortization of deferred gross profit.) (To record interest.) Debit Account Titles and Explanation Date Credit 7416000 Jan 1, 2020 Accumulated Depreciation - Buildings Depreciation Expense 504000 Buildings 11401 Sales Revenue 3480 (To record sale of building.) Jan. 1.2020 Right-of-Use Asset 7415995 Lease Liability 7415 MUTARIA (To record inception of lease.) Jan. 1.2020 Lease Liability 699057 Cash (To record lease payment.) Dec. 31, 2020 Depreciation Expense 211886 Right-of-Use Asset (To record depreciation expense.)Step by Step Solution
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