On January 1,2011,Soldier Company sold a building to Billy Bank for $40,000,000 and immediately leased it back under a 25-year non-cancellable lease at $3,208,000 per year,payable at the beginning of each year.Billy used an implicit rate of 7% to determine the lease payments,and this rate is known to Soldier.The building had a carrying value of $12,000,000 on Soldier's books.
Requirement:
Assume that the lease is an operating lease for both the lessee and lessor.Prepare all necessary journal entries for 2011 for Soldier (the seller-lessee)and Billy (the buyer-lessor).Soldier will continue to depreciate the building on a straight-line basis over the lease term.

Question

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The Answer of On January 1,2011,Soldier Company sold a building to Billy Bank for $40,000,000 and immediately leased it back under a 25-year non-cancellable lease at $3,208,000 per year,payable at the beginning of each year.Billy used an implicit rate of 7% to determine the lease payments,and this rate is known to Soldier.The building had a carrying value of $12,000,000 on Soldier's books.
Requirement:
Assume that the lease is an operating lease for both the lessee and lessor.Prepare all necessary journal entries for 2011 for Soldier (the seller-lessee)and Billy (the buyer-lessor).Soldier will continue to depreciate the building on a straight-line basis over the lease term.

On January 1,2011,Soldier Company Sold a Building to Billy Bank