RUL4 (LO 2, 4) Excel (Lessee Entries, Finance Lease and Unguaranteed Residual Value) Assume that on December 31, 2019, Kimberly Clark Corp. signs a 10 yeur, non-cancelable lente agree ment to lease one building from Sheffield Storage Company. The following information pertains to this lease agreement 1. The agreement requires equal rental payment of $71,630 beginning on December 31, 2019 2. The fale value of the building on December 31, 2019, 5525,176 3. The hallding has an estimated economie life of 12 years, a guaranteed residual value of $10,000 and an expected residual value of $7.000 Kimberly-Clark depreciates similar buildings on the straight line method 4. The lewe noorenewable at the termination of the lewe, the building reverts to the lesse 5. Kimberly Clarks incremental borrowing rate de mes per year. The lewe's implicit rate is not kuwa by Kimberly Clark Instructions 2. Prepare the journal entries on the lease books to reflect the signing of the lease agreement and to record the payments and expenses related to this name for the year 2019, 2020, and 2021. Kimberly Clafocal year end is December 31 I suppose the same facts above scept that Kimberly Clark incurred legal fees resulting from the election of the law of .000, and ceveda la incentive from Sheffield to enter the base of $1.000 How would the initial measurement of the law lily and right of the affected under this situation 21-62 CHAPTER 21 Accounting for Leases c. Suppose that in addition to the 5710 annual rental payments, Kimberly Clark is also required to pwy 55.000 for insurance cous each year on the building directly to the leser, Sheffield Storage. How would this rectory affect the initial measurement of the lease liability and right-of-use asset! d. Retom to the original facts in the problem. Now suppose that at the end of the lease term, Kimberly Clark ook good care of the stand Sheffield agree that the fale value of the act is actually $10.000. Recond the entry for Kimberly Clark at the end of the case to return control of the storage building to Sheffield (suming the actual of interest on the lease liability has already been made) 14 LO 2,4 Excel (Leste Entries Finance Les and Unguaranteed Residual Value) Asume that on December 31, 2019, Kimberly Clark Corp. 10-year-cancelable lease agree ment to lease a corage building from Sheffield Soap Company. The following information perinte the agreement 1. The agreement requires equal rental payment of 7.30 beginning on December 31, 2010 2. The fair value of the building on December 1, 2017, 1538,17 The building han estimated economic life of 12 years and residual value of $10.00, und expected residual of $2.000 Kimberly Clark depreciates similar buildings on the straight in the & The Inselnewable. All the termination of the bene, the building revert to the lemot * Kimberly Clarks incremental botwing rate la per year. The mornicitate not known by Kimberly Instructions Prepare the journal entries on the books to reflect the signing of the wearement and to the payments and expenses and to this use for the years 2009, 2010, and Kimberly Garfocalyn December So the mate verster Kimberly Clart incurred resting from the Bio of the lease of 5.000 and received a se incentive Pro Sheffield tower the lase of 51.000 flow would the initialement of the least ability and night of we be affected under this 21-62 CHAPTER 21 counting for less Suppose that in addition to 7. malay Kimberly Clarksode pay $5.000 forint on the building directly to the head to How wild they coul the mother and d. then in the prema the end of my Clark of the tani shu 310,000 Reche Kimberly Clark the end of control but in the city has made)
