This question deals with Lessee Entries; Capital lease with Executory costs and unguaranteed residual value. I've attached the excel spreadsheet that I need help with. I will need formulas or explanations on how the amounts were calculated. 
Name: Exercise: E21-3, Lessee Entries; Capital Lease with Executory Costs and Unguaranteed Residual Value Course: Date: Assume that on January 1, 2011, Kimberly-Clark Corp. signs a 10-year noncancelable lease agreement to lease a storage building from Trevino Storage Company. The following information pertains to this lease agreement: 1. The agreement requires equal rental payments of $90,000 beginning on January 1, 2011. 2. The fair value of the building on January 1, 2011, is $550,000 3. The building has an estimated economic life of 12 years, with an unguaranteed residual value of $10,000 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 12% per year. The lessor's implicit rate is not known by Kimberly-Clark. 6. The yearly rental payment includes $3,088.14 of executory costs related to taxes on the property. Instructions: 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 2011 and 2012. Kimberly-Clark's corporate year end is December 31. Capitalized amount of the lease: Yearly payment Executory costs Minimum annual lease payment Amount Amount Formula Use the Excel Present Value (=PV) formula to determine the present value. Jan 1, 11 Jan 1, 11 Dec 31, 11 Dec 31, 11 Jan 1, 12 Dec 31, 12 Dec 31, 12 Schedule 1: Account Title Account Title Amount Account Title Account Title Account Title Amount Amount Account Title Account Title Amount Account Title Account Title Amount Account Title Account Title Account Title Account Title Amount Amount Amount Account Title Account Title Amount Account Title Account Title Amount Amount Amount Amount Amount Amount Amount Amount KIMBERLY-CLARK CORPORATION (Lessee) Lease Amortization Schedule Annual Payment Less Executory Costs Annual Reduction Payment Interest of Lease Date Less (12%) Lease Liability Executory on Liability Liability Costs Jan 1, 11 Amount Jan 1, 11 Formula Amount Formula Formula Jan 1, 12 Amount Formula Formula Formula Jan 1, 13 Amount Formula Formula Formula Exercise 21-3, Page 1 of 1, 08/04/2012, 15:19:31
