A company sells a building to a bank in 2011 at a gain of $100,000 and immediately leases the building back for period of five years. The lease is accounted for as an operating lease. The building was originally purchased for $200,000 and currently had a book value of $50,000 at the date of the sale. What amount should be recognized as a gain in 2011 using IFRS?

Question

Quizplus · Accepted Answer

Under IFRS, the gain on the sale of the building should be recognized immediately as the seller does not have any continuing involvement in the building (except for the lease arrangement). The gain is calculated as the difference between the selling price and the book value of the building, which is $100,000 in this case. Therefore, the correct answer is C) $100,000.

A Company Sells a Building to a Bank in 2011