On January 15 2011 Leno Inc. Which has a March 31 year-

On January 15 2011 Leno Inc. Which has a March 31 year-end entered into a transaction to sell the land and building that contained its manufacturing operations for a total selling price of $ 19750000? The book value of the land and the building was $ 3420000. The fiscal closing was not expected to occur until sometime between July 2012 and March 2013.On March 16 2011 Leno Inc. received and irrevocable letter of credit issued by a major bank for $ 5000000. This represented more than 25% of the sale price. Leno Inc. would collect the $ 5000000. And would keep the money even if the buyer decided not to complete the transaction. The letter of credit had an option for an extension for up to one year for a total period of two years. At closing the entire selling price was to be paid in cash.Leno Inc. was going to continue its manufacturing operations in the building and would continue to be responsible for all normal occupancy cost until final closing when it would move to another location. After the sale the building would be torn down and replaced by a large office building complex.Based on relevant accounting pronouncements for the sale of real estate how should Leno Inc. account for the transaction at March 31 2011?What additional type of evidence should the auditor examine prior to recognizing any gain on the transaction?
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