Problem:
1. Kling Technology disclosed the following minimum rental commitments under non-cancelable operating leases in its 2012 annual report:
|
Minimum operating lease payments
|
Amount (in millions)
|
|
2013
|
$ 86
|
|
2014
|
56
|
|
2015
|
44
|
|
2016
|
36
|
|
2017
|
32
|
|
2018
|
30
|
|
Total
|
$284
|
What is the present value of these operating lease payments, assuming a 6% discount rate?
2. Taylor's Corp. disclosed the following lease information in its 2011 annual report (in millions). What lease liability does Taylor's report on its balance sheet?
|
|
Capital Leases
|
Operating Leases
|
|
2012
|
$1,000
|
$10,746
|
|
2013
|
1,000
|
11,022
|
|
2014
|
1,000
|
9,473
|
|
2015
|
1,000
|
8,841
|
|
2016
|
1,000
|
8,579
|
|
Thereafter
|
19,500
|
121,524
|
|
Total
|
24,500
|
$170,185
|
|
Amount representing interest
|
(11,578)
|
|
|
Net present value of leases
|
$ 12,922
|
|
Summary of problem:
These short answer questions is basically from Finance. The 1st question is about computing the present value of operating lease payments at 6% discount rate and the 2nd question is about computing the lease liability of a business.