GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
17th Edition
ISBN: 9781260218831
Author: Libby
Publisher: MCG CUSTOM
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Textbook Question
Chapter S, Problem 1C
Analyzing Starbucks’s Lease Disclosures
The following questions pertain to Starbucks’s 2012
- 1. Does Starbucks sign mainly operating or capital leases?
- 2. Where does Starbucks disclose its operating leases on its balance sheet?
- 3. Assume a discount rate of 6 percent and that the amount in the “thereafter” row in Starbucks’s foot-note disclosure is equally spread over the years 2018-2022. What is the present value of Starbucks’s operating leases at the end of fiscal 2012?
- 4. What is the impact on Starbucks’s 2012 debt-to-equity ratio of adding the present value of its operating leases to the liability section of its 2012 balance sheet?
- 5. Would making the adjustment in requirement (4) change your opinion about Starbucks’s creditworthiness?
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Assume Fortune Brands, Inc., reports the following footnote relating to its leased facilities in its 2016 10-K report.
Future minimum rental payments under noncancelable operating leases as of December 31, 2016 are as follows:
(In millions)
2017..
2018.
2019.
2020.
2021.
Remainder.
Total minimum rental payments..
Compute the present value of these operating leases using a discount rate of 7% and round the remaining lease life to the nearest whole year.
Select one:
O
O
O
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33.5
26.9
20.2
15.7
37.3
$179.2
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Southwest Airlines provides scheduled air transportation services in the United States. Like many airlines, Southwest leases many of its planes from Boeing Company. In its long-term debt disclosure note included in the financial statements for the year ended December 31, 2013, the company listed $56 million in lease obligations. The existing leases had an approximate eight-year remaining life and future lease payments average approximately $8 million per year. Required: 1. Determine the effective interest rate the company used to determine the lease liability assuming that lease payments are made at the end of each fiscal year. 2. Repeat requirement 1 assuming that lease payments are made at the beginning of each fiscal year.
Organic Markets reports operating lease information in its 2016 annual report (in millions). You determine that a discount rate of 6.0% is appropriate for Organic Markets and calculate the following. What economic liability is
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Note: Round the remaining lease term to the nearest whole year, using the final lease payment provided as an estimate of annual future payments.
Year
2017
2018
2019
2020
2021
Thereafter
Minimum operating
lease payments
$650
783
836
852
854
9,728
$13,703
Select one:
O a. $8,358 million
O
b. $13,703 million.
O
c. $10,183 million
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d. $10,060 million.
Chapter S Solutions
GB 112/212 MANAGERIAL ACC. W/ACCESS >C<
Ch. S - Defining a Lessor Which of the following best...Ch. S - Prob. 2MCQCh. S - Prob. 3MCQCh. S - Prob. 4MCQCh. S - Prob. 5MCQCh. S - Prob. 6MCQCh. S - Prob. 1MECh. S - Prob. 2MECh. S - Prob. 3MECh. S - Prob. 4ME
Ch. S - Prob. 1ECh. S - Prob. 2ECh. S - Prob. 3ECh. S - Prob. 4ECh. S - Calculating a Deferred Tax Liability LOS-5 On...Ch. S - Prob. 6ECh. S - Prob. 7ECh. S - Prob. 8ECh. S - Prob. 9ECh. S - Prob. 10ECh. S - Converting Operating Leases to Capital Leases...Ch. S - Converting Operating Leases to Capital Leases...Ch. S - Computing Effective Tax Rates LOS-4 Below is...Ch. S - Prob. 4PCh. S - Prob. 5PCh. S - Prob. 6PCh. S - Analyzing Starbuckss Lease Disclosures The...Ch. S - Analyzing Disneys Income Tax Disclosures The...
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