Problem:
Ilmanov Ltd. sold a building to a bank at the beginning of 2013 at a gain of $175,000 and immediately leased the building back for a period of 7 years. The lease is accounted for as an operating lease.
Required:
Question 1: Determine the amount of gain on the sale and leaseback that Ilmanov should recognize in 2013 under (1) U.S. GAAP and (2) IFRS.
Question 2: Determine the adjustments that Ilmanov would make in 2013 and 2014 to reconcile net income and stockholders' equity under U.S. GAAP to IFRS.
Note: Explain all calculation and formulas.