Present value factors for the annuity

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Dean manufacturing is planning to construct expanded facilities and will finance a portion of its new plant with proceeds from the sale of its current plant. To ensure that its operations will not be interrupted, Dean will sell its current plant and lease it back for the estimated 2 year construction period of its new facilities. Deans current plant is estimated to have a useful life of 25 years. Dean bought the plant 9 years ago for $200,000 and the asset has an accumulated depreciation of $140,000. Dean signed an agreement to sell the plant for $350,000 January 1 year 10 and Lease it back for $15,000 per year, deans incremental borrowing rate is 6%. Present value factors for annuity

2 years- 6% =1.833

23years-6%=12.303

25 years-6%=12.783

Dean uses GAAP On its December 31, year 10 financial statements Dean will defer Gain on the sale of its current plant in the amount of?

A) $290,000

B) $262,505

C) $27,495

D) $0

Reference no: EM13127206

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