Business, 24.03.2020 01:51 annamcveigh50

To raise operating funds, National Distribution Center sold its office building to an insurance company on January 1, 2018, for $800,000 and immediately leased the building back. The operating lease is for the final 12 years of the building's estimated 20-year remaining useful life. The building has a fair value of $800,000 and a book value of $650,000 (its original cost was $1 million). The rental payments of $100,000 are payable to the insurance company each December 31. The lease has an implicit rate of 9%.
Prepare the appropriate entries for National Distribution Center on:
1. January 1, 2019, to record the sale-leaseback
2. December 31, 2018, to record necessary adjustments

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