To raise operating funds, Coyne Incorporated sold its office building to an insurance company on January 1, 2018, for $1,600,000 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 $1,600,000 and a book value of $1,300,000 (its original cost was $2 million). The rental payments of $200,000 are payable to the insurance company each December 31. The lease has an implicit rate of 9%.
Required:
Round your answers to the nearest whole dollar amounts.
Prepare the appropriate journal entries for Coyne Incorporated on:
1. January 1, 2018, to record the sale-leaseback.
2. December 31, 2018, to record necessary adjustments.

Question

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The Answer of To raise operating funds, Coyne Incorporated sold its office building to an insurance company on January 1, 2018, for $1,600,000 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 $1,600,000 and a book value of $1,300,000 (its original cost was $2 million). The rental payments of $200,000 are payable to the insurance company each December 31. The lease has an implicit rate of 9%.
Required:
Round your answers to the nearest whole dollar amounts.
Prepare the appropriate journal entries for Coyne Incorporated on:
1. January 1, 2018, to record the sale-leaseback.
2. December 31, 2018, to record necessary adjustments.

To Raise Operating Funds, Coyne Incorporated Sold Its Office Building