Assume that on December 31, 2019, Kimberly-Clark Corp. signs a 10-year, non-cancelable lease agreement to lease a storage building from Sheffield Storage Company. The following information pertains to this lease agreement.

- The agreement requires equat rental payments of $67,399 beginning on December 31, 2019.

- The fair value of the building on December 31 , 2019 is $492,833.

- The bullding has an estimated economic life of 12 years, a guaranteed residual value of $9,500, and an expected residual value of $6,200. Kimberly Clark depreciates similar buildings on the straight-line method.

- The lease is nonrenewable. At the termination of the lease the building reverts to the lessor.

- Kimberly Clark's incremental borrowing rate is 8% per year. The lessor's implicitrate not known by Kimberly-Clark.

(a) Suppose the same facts as above except that Kimberly-Clark incurred legal fees resulting from the execution of the lease of $5,000, and received a lease incentive from Sheffield to enter the lease of $1,000. How would the initial measurement of the lease liability and right -of-use asset be affected under this situation? (Round answer to 0 decimal places)

Right of Use Asset = ?

(b) Suppose that in addition to the $67,399 annual rental payments, Kimberly-Clark is also required to pay $5,000 for insurance costs each year on the building directly to the lessor, Sheffield Storage. How would this executory cost affect the initial measurement of the lease liability and right-of-use asset? (Round answer to decimal places, eg. 5,275.)

Lease Liability = ?

(c) Now suppose that at the end of the lease term, Kimberly Clark took good care of the asset and Sheffield agrees that the fair value of the asset is actually $9,500. Record the entry for Kimperly Clark at the end of the lease to return control of the storage building to (assuming the accrual of Interest on the lease has already been made).

Lease Liability.........xxx

---Gain on Lease............xxx