Able sold its headquarters building at a gain, and simultaneously
leased back the building. The lease was reported as a capital
lease. At the time of sale, the gain should be reported as

(d) In a sale-leaseback transaction, if the leaseback is
recorded as a capital lease and the lessee has retained substantially
all of the rights to use the property, then any gain on the
sale must be deferred and amortized over the life of the property
in proportion to the amortization of the leased asset. This deferred
gain acts as an asset valuation allowance resulting in the
net amount shown for the leased asset being equal to the same
carrying value as if the sale and leaseback transaction had not
occurred.