FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
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Chapter S, Problem 2P
Converting Operating Leases to Capital Leases
LOS-1, S-3 Refer to Apple’s operating lease disclosure provided in S P-l. Assume that the payment amount in the ‘‘thereafter” row is equally spread out over the years 2018–2022 and that the appropriate discount rate is still 6 percent. What is the present value of Apple’s “total minimum lease payments” at the end of fiscal 2012?
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Caleb's Corp disclosed the following minimum rental commitments under non-cancelable operating leases in its 2020 annual report (in millions).
Thereafter
Total
Operating
Leases
2021 $24,424
2022
25,245
2023
25,065
2024
24,682
2025
What is the approximate present value of the minimum lease payments? Assume a discount rate of 6.0%.
Note: Round the remaining lease term to the nearest whole year, using the final lease payment provided as an estimate of annual future payments.
Select one:
@
.
24,087
292,668
$416,171
a. $373,713 million.
b. $306,046 million.
c. $416,171 million.
d. $310,424 million *
e. $255,007 million.
Caleb's Corp disclosed the following minimum rental commitments under non-cancelable operating leases in its 2020 annual report (in millions).
Operating
Leases
2021
$48,848
2022
50,490
2023
50,130
2024
49,364
2025
48,174
Thereafter
Total
585,336
$832,342
What is the approximate present value of the minimum lease payments? Assume a discount rate of 6.0%.
Caleb's Corp disclosed the following minimum rental commitments under non-cancelable operating leases in its 2020 annual report (in millions).
Operating
Leases
2021
$48,848
2022
50,490
2023
50,130
2024
49,364
2025
48,174
585,336
$832,342
Thereafter
Total
What is the approximate present value of the minimum lease payments? Assume a discount rate of 6.0%.
Note: Round the remaining lease term to the nearest whole year, using the final lease payment provided as an estimate of annual future payments.
Select one:
a. $612,091 million
О
b. $747,426 million
О
c. $510,013 million
О
d. $620,847 million
О
e. $832,342 million
Chapter S Solutions
FINANCIAL ACCOUNTING 9TH
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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- 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 $ 45.6 33.5 26.9 20.2 15.7 37.3 $179.2 A. $179.2 million B. $140.7 million C. $127.3 million D. $154.9 millionarrow_forwardOrganic 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 potentially left off Organic Markets' balance sheet? 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 O d. $10,060 million.arrow_forwardThe following facts pertain to a noncancelable lease agreement between Mooney Leasing Company and Rode Company, a lessee. Inception date: May 1, 2025 Annual lease payment due at the beginning of each year, beginning with May 1, 2025: $30,000 Bargain-purchase option price at end of lease term = $10,000 Lessor's implicit rate = 7% The lease term ends in FIVE years on April 30, 2030. What is the present value of the asset being leased? Recommendation: draw a timeline of the cash flows from the lessee to the lessor. Your Answer: Answerarrow_forward
- Cabela's Corp disclosed the following minimum rental commitments under non-cancelable operating leases in its 2015 annual report (in millions). Operating Leases 2016 $ 24,424 2017 25,245 2018 25,065 2019 24,682 2020 24,087 Thereafter 292,668 Total $416,171 What is the approximate present value of the minimum lease payments? Assume a discount rate of 6.0% and round the remaining lease term to the nearest whole year. A. $233,357 million B. $ 15,113 million C. $255,007 million D. $373,713 million E. None of the above Do not give answer in image formatearrow_forwardTOPIC: LEASESCompute for the following (show solution):a. Manufacturer's profit recognized in the year 2020.b. Total financial revenue pertaining to the lease.c. Interest Revenue recognized in the year 2020.d. Net Finance lease Receivable balance, December 31, 2020.arrow_forwardUse the information pertaining to Laura Leasing Company and Plote Company from E21.15. Assume that the expected residual value at the end of the lease is $10,000, such that the payments are $24,638.87. Instructions Prepare all of the journal entries for the lessee for 2020 to record the lease agreement, the lease payments, and all expenses related to this lease. Assume the lessee’s annual accounting period ends on December 31. In E21.15 Laura Leasing Company signs an agreement on January 1, 2020, to lease equipment to Plote Company. The following information relates to this agreement. 1. The term of the non-cancelable lease is 3 years with no renewal option. The equipment has an estimated economic life of 5 years. 2. The fair value of the asset at January 1, 2020, is $80,000. 3. The asset will revert to the lessor at the end of the lease term, at which time the asset is expected to have a residual value of $7,000, none of which is guaranteed. 4. The agreement requires equal annual…arrow_forward
- In Note 11, of its 2018 financial statements, Chipotle (CMG) reported the following future operat- ing lease information: E5.12 Contractually required future minimum cash lease payments under existing operating leases as of December 31, 2018, are as follows: $ 294,191 296,579 294,941 295,290 2019 2020 . 2021 2022 290,980 2,478,397 2023 Thereafter. Total minimum lease payments $3,950,378 a. Assuming a discount rate of 5 percent, estimate the unrecognized asset and liability for assets acquired under operating leases for CMG at December 31, 2018. b. Given the estimated unrecognized liability calculated in part a., what impact does including this amount have on the liabilities of CMG reported on the balance sheet?arrow_forwardHelp with parts 4 and 5. 4. Prepare journal entries for Sax for the years 2016 and 2017. 5. Next Level If the lease term is 3 years and the annual payment is $110,000, how would Sax classify the lease under (a) U.S. GAAP and (b) IFRS?arrow_forwardes On September 1, 2024, Custom Shirts Incorporated entered into a lease agreement appropriately classified as an operating lease. The lease term is three years. The annual payments by Custom Shirts are (a) $20,000 for year 1, (b) $24,000 for year 2, and (c) $28,000 for year 3. How much total lease expense will Custom Shirts recognize for 2024? Multiple Choice $20,000 $6,667 $8,000 $24,000arrow_forward
- Required State with reasons what type of lease you think this is Compute the present value of the minimum lease payments Prepare schedule of the lease payments for the lease period What expense would Massey Ferguson recognize on June 30 2011? and 2012arrow_forwardReporting Finance Lease, Guaranteed Residual-Lessee Mac Leasing Company (lessor) and Ash Corporation (lessee) signed a four-year lease on January 1 of Year 1. The underlying asset has an estimated life of six years and a fair value of $50,000, and the property reverts to Mac at the end of the lease term. Lease payments of $11,923 are payable on January 1 of each year beginning at the lease commencement and are set to yield Mac a return of 8%, which is known to Ash. The estimated residual value at the end of the lease term is $10,000 and is guaranteed by Ash Corporation. Ash expects the residual value at the end of the lease term to be $10,000. The lease contains no purchase option. Requireda. How would Ash Corporation classify the lease? Finance Lease b. What is the lease liability balance on January 1, the lease commencement date? Note: Round your answer to the nearest whole dollar. $ Estimated Residual = Guaranteed Residual, Estimated Residual < Guaranteed Residual Note: Round your…arrow_forwardA) Compute the present value of operating lease obligations using an 8% discount rate for JarirInc. and Extra Inc. as of January 31, 2009. Assume that all cash flows occur at the end of each year. Also assume that the minimum lease payment each year after 2013 equals $360 million per year for three years for Jarir Inc. and $333.5 million for four years for Extra Inc.. (This payment scheduling assumption can be obtained by assuming that the payment amount for 2013 continues until the aggregate payments after 2013 have been made, rounding the number of years upward, and then assuming level payments for that number of years. For Jarir Inc.: $1,080/$386 = 2.8 years. Rounding up to three years creates a three-year annuity of $1,080/3 years = $360 million per year. B) Compute each of the following ratios for Jarir, Inc. and Extra Inc. as of January 31, 2009, using the amounts originally reported in their balance sheets for the year.(1) Liabilities to Assets Ratio = Total Liabilities/Total…arrow_forward
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