Question

Rawl Corporation sold a building to a bank at the beginning of 2017 at a gain of $82,500 and immediately leased the building back for a period of four years. The lease is accounted for as an operating lease. The book value of building inet) is 5507000 Assume that a US-based company is issuing securities to foreign investors who require financial statements prepared in accordance with IFRS. Thus, adjustments to convert from US GAAP to IFRS must be made. Ignore income taxes. Required: a. Prepare journal entries for this sale and leaseback for the years ending December 31, 2017, and December 31, 2018, under (1) US GAAP and (2) IFRS b. Prepare the entryfes) that Rawi would make on the December 31, 2017 and December 31, 2018, conversion worksheets to convert U.S. GAAP balances to IFRS Complete this question by entering your answers in the tabs below. Required A Required B Prepare fournal entries for this sale and leaseback for the years ending December 31, 2017, and December 31, 2018. under (1) US GAAP and (2) IFRS. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Vieracionit Journal entry worksheet

Answer 1

Answer-A
Journal entries
Date	Particulars	Debit($)	Credit($)
	1. US GAAP
Jan 1, 2017	Cash A/c Dr	$           5,89,500
	To Deferred gain on sale A/c		$       82,500
	To Building A/c		$    5,07,000
Dec 31, 2017	Deferred gain on sale A/c Dr (82500/4)	$              20,625
	To Gain on sale A/c		$       20,625
Dec 31, 2018	Deferred gain on sale A/c Dr	$              20,625
	To Gain on sale A/c		$       20,625
	2. IFRS
Jan 1, 2017	Cash A/c Dr	$           5,89,500
	To Gain on sale A/c		$       82,500
	To Building A/c		$    5,07,000
Answer-B
Journal entry
Date	Particulars	Debit($)	Credit($)
Jan 1, 2017	Deferred gain on sale A/c Dr (82500-20625)	$              61,875
	To Gain on sale A/c		$       61,875
Jan 1, 2018	Deferred gain on sale A/c Dr	$              41,250
	To Retained earnings A/c		$       41,250
	(Being effect of conversion entry from US GAAP to IFRS)
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