Assume that on January 1 2008 Kimberly Clark Corp signs

Assume that on January 1, 2008, 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 $72,000 beginning on January 1, 2008.2. The fair value of the building on January 1, 2008 is
$440,000.3. 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 $2,470.51 of
executory costs related to taxes on the property.InstructionsPrepare 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 2008 and 2009. Kimberly-Clark’s corporate year-
end is December 31.View Solution:
Assume that on January 1 2008 Kimberly Clark Corp signs
SOLUTION-- http://expertanswer.online/downloads/assume-that-on-january-1-2008-kimberly-
clark-corp-signs/

See Answer here expertanswer.online

Powered by TCPDF (www.tcpdf.org)