On January 1, 2014, Christopher Properties Sold a Building to Another

On January 1, 2014, Christopher Properties sold a building to another company and immediately leased it back again. The Christopher' book value for the building was $15,480. The lease was for five years with $5,000 payable at the end of each year. The payments, discounted at 11%, equaled $18,480. Which entry would Christopher Properties not make in 2014?

A) Depreciation Expense: Leased Asset $\quad$$\quad$ 3,790
Accumulated Depreciation:
Leased Asset $\quad$$\quad$$\quad$$\quad$$\quad$ 3,790

B) Cash 18,480 Building $\quad$$\quad$$\quad$$\quad$ 15,480
Profit on Sale-Leaseback $\quad$$\quad$$\quad$ 3,000

C) Leased Equipment Under Capital Leases $\quad$$\quad$ 18,480
Obligation Under Capital Leases $\quad$$\quad$$\quad$$\quad$ 18,480

D) Obligation Under Capital Leases $\quad$$\quad$$\quad$ 2,967
Interest Expense $\quad$$\quad$$\quad$$\quad$$\quad$ 2,033
Cash $\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ 5,000

Correct Answer:

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