Response to the following problem:
Wal-Mart Stores, Inc., is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and disclosure notes revealed the following information:
Balance Sheet ($ in millions) 2011 2010
Assets
Property:
Property under capital lease $5,509 $5,669
Less: Accumulated amortization (2,780) (2,906)
Liabilities
Current Liabilities: Obligations under capital leases due within one year 336 346 Long-term debt:
Long-term obligations under capital leases 3,150 3,170
Required:
1). Discuss some possible reasons why Walmart leases rather than purchases most of its premises.
2). The net asset "property under capital lease" has a 2011 balance of $2,729 million ($5,509-2,780). Liabilities for capital leases total $3,486 ($336+3,150).
Why do the asset and liability amounts differ?