[b) Your answer is correct. 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? Right-of-use asset $ 492 4.20 eTextbook and Media List of Accounts Attempts: 2 of 4 used Using multiple attempts will impact your score. 50% score reduction after attempt 3 (c) Your Answer Correct Answer (Used] Suppose that in addition to the $47,199 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 cast affect the initial measurement of the lease liability and right-of-use asset? (Round answer to 0 decimal places, e.g. 5,275.) Lease liability $ 524 654 [d) 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 $10,500. Record the entry for Kimberly-Clark at the end of the lease to return control of the storage building to Sheffield (assuming the accrual of interest on the lease liability has already been made). (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit eTextbook and Media List of Accounts Save for Later Attempts: 0 of 4 used Submit Answer Using multiple attempts will impact your score. 50%% score reduction after attempt 3Question 12 of 19 1.25 / 2.5 E View Policies Show Attempt History Current Attempt in Progress 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. 1. The agreement requires equal rental payments of $67,199 beginning on December 31, 2019. 2. The fair value of the building on December 31, 2019 is $491,847. 3. The building has an estimated economic life of 12 years, a guaranteed residual value of $10,500, and an expected residual value of $7.400. Kimberly-Clark depreciates similar buildings on the straight-line method. 4. The lease is nonrenewable. At the termination of the lease, the building reverts to the lessor. 5. Kimberly-Clark's incremental borrowing rate is 8% per year. The lessor's implicit rate is not known by Kimberly-Clark. Click here to view factor tables. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) (al Your answer is correct. Prepare the journal entries on the lessee's books to reflect the signing of the lease agreement and to record the payments and expenses related to this lease for the years 2019, 2020, and 2021. Kimberly-Clark's fiscal year-end is December 31. (Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to O decimal places eg. 5.275.) Account Titles and Explanation Debit Credit Right-of-Use Asset 488 420 Lease Liability 488 4.20 (To record the lease) Lease Liability 47_199 Cash 47.199 "To record first lease payment) Amortization Expense 48.842 Right-of-Use Asset 48 842 To record amortization of the right-of-use asset) Lease Liability 33501 Interest Expense 33.695 Cash 47-199 [To record Interest expense) Amortization Expense 48.842 Right-of-Use Asset 48 842 "To record amortization of the right-of-use asset) Lease Liability 34.181 Interest Expense 31 018 Cash 47-199 "To record Interest expense) e Textbook and Media List of Accounts Attempts: 2 of 4 used Using multiple attempts will impact your score. 50 score reduction after attempt 3 (b) Your answer is correct. 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? Right-of-use asset 492 420 e Textbook and Media List of Accounts Attempts: 2 of 4 used Using multiple attempts will impact your score. 50 score reduction after attempt 3