Current Attempt in Progress

Assume that on December $31,2024,$ Kimberly$-$Clark Corp. signs a $10-$year, non$-$cancelable lease agreement to lease a storage

building from Oriole Storage Company. The following information pertains to this lease agreement.

The agreement requires equal rental payments of $$67,599$ beginning on December $31,2024.$

The fair value of the building on December $31,2024,$ is $$494,051.$

The building has an estimated economic life of $12$ years, a guaranteed residual value of $$9,000,$ and an expected residual

value of $$5,500.$ 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 implicit rate is not known by Kimberly$-$Clark.

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$($For calculation purposes, use $5$ decimal places as displayed in the factor table provided.$)$

$($a$)$ Lease Liability

$($To record the lease$)$

Lease Liability

J

$($To record first lease payment$)($To record interest expense$)$

$\frac{1}{26}$

$($To record amortization of the right$-$of$-$use asset$)$

Lease Liability

$($To record amortization of the right$-$of$-$use asset$)$

Interest Expense

I

$7$

$($To record interest expense$)$