Marineta Corporation owned a manufacturing facility. Marineta had purchased the building for $11,400,000, and had...
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Marineta Corporation owned a manufacturing facility. Marineta had purchased the building for $11,400,000, and had recorded $4,800,000 depreciation on the facility. On January 1, 2019, Marineta sold the building to HMD Ltd. for $7,704,000, and then immediately signed a 30-year agreement to lease back the building for annual payments of $742,940, due at the start of each year. Title to the building would return to Marineta at the conclusion of the lease. HMDs implied interest rate, which was known to Marineta, was 10%.
Use the factor table PRESENT VALUE OF 1.
& the factor table PRESENT VALUE OF AN ANNUITY DUE. Prepare the journal entries to be recorded by Marineta for the 2019 fiscal year (assuming a December 31 year-end, and that Marineta follows ASPE). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 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 0 for the amounts.)
Date Account Titles and Explanation Debit Credit 1, 2020 (To record sale of building.) (To record inception of lease.) (To record lease payment.) 31, 2020 (To record depreciation expense.)
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