To raise operating funds, National Distribution Center sold its office building to an insurance company on January 1, 2024, 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%.

Required:
Prepare the appropriate entries for National Distribution Center on
1. January 1, 2024, to record the sale-leaseback
2. December 31, 2024, to record necessary adjustments