E10-30. Analyzing, Interpreting and Capitalizing Operating LeasesLO1Staples Inc. reports the following footnote relating to its operating leases in its 10-K report for the 2015fiscal year ended January 30, 2016 ($ thousands).Staples Inc. (SPLS)Future minimum lease commitments due for retail, distribution, fulfillment and support facilities(including restructured facilities) and equipment leases under non-cancelable operating leasesare as follows (in millions):Fiscal YearTotal2016.$ 6852017..5632018.4242019.3172020230Thereafter ...443$2,662a. What dollar adjustment(s) might we consider to Staples' balance sheet and income statement giventhis information and assuming that Staples intermediate-term borrowing rate is 8% and roundingthe remaining lease life to the nearest whole year? Explain.b. Would the adjustment from part a make a substantial difference to Staples' total liabilities? (Staplesreported total assets of nearly $10,172 million and total liabilities of nearly $4,788 million for fiscal2015.)

A lease of equipment is a specific type of lease agreement where one party (the lessor) grants…

Staples Inc. reports the following footnote relating to its operating leases in its 10-K report for the 2015 fiscal year ended January 30, 2016 ($ thousands). Future minimum lease commitments due for retail, distribution, fulfillment and support facilities (including restructured facilities) and equipment leases under non-cancelable operating leases are as follows (in millions):

Staples Inc. reports the following footnote relating to its operating leases in its 10-K report for the 2015 fiscal year ended January 30, 2016 ($ thousands). Future minimum lease commitments due for retail, distribution, fulfillment and support facilities (including restructured facilities) and equipment leases under non-cancelable operating leases are as follows (in millions):

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2016, an entity entered into a four-year operating lease. The payments were as follows: P20,000 for 2016; P18,000 for 2017; P16,000 for 2018 and P14,000 for 2019. What is the correct amount of lease expense for 2019? 20,500 19,000 14,000 18,000 17,000
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?
The Controller of the Berg Corporation started the following amortization table as it relates to a lease: Date Annual Lease Payments Interest at the rate of 11% Reduction of Liability Liability Lease Inception January 1, 2015 $73,753 January 1, 2015 12,000 0 21,000 $61,753 December 31, 2015 a) Complete the table. b) Prepare the journal entry to record the lease on the books. c) Record the January 31, 2015 journal entry.
The Controller of the Berg Corporation started the following amortization table as it relates to a lease.: Date Annual Lease Payments Interest at the rate of 11% Reduction of Liability Liability Lease Inception January 2 2015 $73,753 January ,1 2015 $12,000 0 121,000 $61,753 December 31,2015 Complete the table. Prepare the journal entry to record the lease on the books. Record the December 31 ,2015 journal entry.
Reyes Corp. disclosed the following lease information in its 2019 annual report related to its leasing activities (in millions). Capital Leases Operating leases 2020 $ 307 $ 2,471 2021 286 2,302 2022 262 1,202 2023 251 980 116 830 2024 696 9,130 Thereafter 1,918 $16,915 Total $ 1,316.1 Present value of net minimum lease payments
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 million
On March 31, 2016, Southwest Gas leased equipment from a supplier and agreed to pay $200,000 annually for 20 years beginning March 31, 2017. Generally accepted accounting principles require that a liability be recorded for this lease agreement for the present value of scheduled payments. Accordingly, at inception of the lease, Southwest recorded a $2,293,984 lease liability. Required: Determine the interest rate implicit in the lease agreement.
FRM Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with FEN Equipment Ltd on 1 January 2015. The lease consists of the following: Date of inception: 1/1/15 Duration of lease: 4 years Life of leased asset: 5 years Lease payments (annual): $550,000 (annual) which includes $80,000 for Maintenance and insurance costs per annum. Guaranteed residual value (Added to final payment): $190,000 Interest rate: 7% Formula for PV of $1 in n periods =1/(1+k)nFormula for present value of annuity of $1 per period for n periods = (1- (1/(1+k)n)) / k where, k is the discount rate expressed in decimal Required: a) Determine the present value of minimum lease rental payment. b) Prepare the journal entries for FRM Ltd (the Lessee) using the Net Method for the following; i. Transfer of control ii. Payment of annual payments for 2015 and 2016.
Fields Finance Ltd. (FFL), a leasing company that reports under ASPE, is in the process of preparing its financial statements for the year ended June 30, 2020. The following leases were entered into:Lease 1: On February 1, 2020, the company entered into a lease contract in respect of plant and machinery for a production line. The details are as follows: 12 quarterly rental payments$ 11,000 (first payment on April 30,2020)Period of contract3 years (from February 1, 2020)Fair value of equipment (cost to FFL)$200,000Guaranteed residual value — end of lease term$ 60,000Estimated residual value — end of useful life$ 20,000Economic life8 yearsImplicit rate12% Lease 2: On April 1, 2020, the company entered into a lease contract in respect of a fleet of distribution vehicles. This lease involves the following payments: Initial rental payment$ 30,000 (due April 1, 2020)10 quarterly rental payments$ 6,000 (first payment due on July 1, 2020)Period of contract3 years (from April 1, 2020)Fair…
FRM Ltd acquired an item of equipment and enters into a non -cancellable lease agreement with FEN Equipment LTd on 1January 2015. The lease consists of the following: Date of inception. 1/1/15 Duration of Lease 4 years Life of Leased asset. 5 years Lease payments (annual) $550000(annual) which includes $80000 for Maintenance and insurance costs per annum Guaranteed residual value (Added to final payment). $190000 Interest rate. 7% Formula for PV of $1/(1+k)n Formula for present value of annuity of $1 per period for n periods= 1-1/(1+k)n /k Where k is the discount rate expressed in decimal Required 1. Determine the PV of minimum lease rental payment. 2. Prepare the journal entries for FRM Ltd (The lessee) using the Net method for the following a) Transfer of control b) Payment of annual payments for 2015 and 2016.
FRM Ltd acquired an item of equipment and enters into a non-cancellable lease agreement with FEN Equipment Ltd on 1 January 2015. The lease consists of the following: Date of inception: 1/1/15 Duration of lease: 4 years Life of leased asset: 5 years Lease payments (annual): $550 000 (annual) which includes $80 000 for Maintenance and insurance costs per annum. Guaranteed residual value (Added to final payment): $190 000 Interest rate: 7% Formula for PV of $1 in n periods =1/(1+k)n Formula for present value of annuity of $1 per period for n periods = 1-1/(1+ k)n/k where, k is the discount rate expressed in decimal Prepare the journal entries for FRM Ltd (the Lessee) using the Net Method for the following; A. Transfer of control B. Payment of annual payments for 2015 and
The following relate to an operating lease agreement: a. The lease term is 3 years, beginning January 1, 2016. b. The leased asset cost the lessor $800,000 and had a useful life of eight years with no residual value. The lessor uses straight-line depreciation for its depreciable assets. c. Annual lease payments at the beginning of each year were $137,000. d. Costs of negotiating and consummating the completed lease transaction incurred by the lessor were $2,400. Required: Prepare the appropriate entries for the lessor from the inception of the lease through the end of the lease term.