Analysis Case 15-4 Lease concepts; Walmart L LO15-1 though L LO15–4 Real World Financials Walmart 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) 2017 2016 Assets Property: Property under finance lease obligations $11,637 $11,096 Less: Accumulated amortization (5,169) (4,751) Liabilities Current liabilities: Finance lease obligations due within one year 565 551 Long-term debt: Long-term finance lease obligations 6,003 5,816 Required: 1. The net asset "property under finance lease obligations" has a 2017 balance of $6,468 million ($11,637 - $5,169). Liabilities for these leases total $6,568 ($565 + $6,003). Why do the asset and liability amounts differ? 2. Prepare a 2017 summary entry to record Walmart's lease payments, which were $800 million. 3. What is the approximate average interest rate on Walmart's finance leases? (Hint: See Req. 2) 4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises.
Analysis Case 15-4 Lease concepts; Walmart L LO15-1 though L LO15–4 Real World Financials Walmart Inc. is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and disclosure notes revealed the following information: Balance Sheet ($ in millions) 2017 2016 Assets Property: Property under finance lease obligations $11,637 $11,096 Less: Accumulated amortization (5,169) (4,751) Liabilities Current liabilities: Finance lease obligations due within one year 565 551 Long-term debt: Long-term finance lease obligations 6,003 5,816 Required: 1. The net asset "property under finance lease obligations" has a 2017 balance of $6,468 million ($11,637 - $5,169). Liabilities for these leases total $6,568 ($565 + $6,003). Why do the asset and liability amounts differ? 2. Prepare a 2017 summary entry to record Walmart's lease payments, which were $800 million. 3. What is the approximate average interest rate on Walmart's finance leases? (Hint: See Req. 2) 4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I need help understanding requirement number one for the case shown in the attached picture. Can you please explain why this asset and liability amounts are different?
![Analysis Case 15-4 Lease concepts; Walmart
L LO15–1 though L LO15–4
Real World Financials
Walmart Inc. is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and
disclosure notes revealed the following information:
Balance Sheet
($ in millions)
2017
2016
Assets
Property:
Property under finance lease obligations
$11,637 $11,096
Less: Accumulated amortization
(5,169) (4,751)
Liabilities
Current liabilities:
Finance lease obligations due within one year
565
551
Long-term debt:
Long-term finance lease obligations
6,003
5,816
Required:
1. The net asset "property under finance lease obligations" has a 2017 balance of $6,468 million ($11,637 - $5,169). Liabilities for these leases
total $6,568 ($565 + $6,003). Why do the asset and liability amounts differ?
2. Prepare a 2017 summary entry to record Walmart's lease payments, which were $800 million.
3. What is the approximate average interest rate on Walmart's finance leases? (Hint: See Req. 2)
4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc9e98a6e-8072-4a61-8fc9-792834bbe9b0%2F348e6b1c-7153-48a5-ab26-6486a8ef9616%2F28xncqj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Analysis Case 15-4 Lease concepts; Walmart
L LO15–1 though L LO15–4
Real World Financials
Walmart Inc. is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and
disclosure notes revealed the following information:
Balance Sheet
($ in millions)
2017
2016
Assets
Property:
Property under finance lease obligations
$11,637 $11,096
Less: Accumulated amortization
(5,169) (4,751)
Liabilities
Current liabilities:
Finance lease obligations due within one year
565
551
Long-term debt:
Long-term finance lease obligations
6,003
5,816
Required:
1. The net asset "property under finance lease obligations" has a 2017 balance of $6,468 million ($11,637 - $5,169). Liabilities for these leases
total $6,568 ($565 + $6,003). Why do the asset and liability amounts differ?
2. Prepare a 2017 summary entry to record Walmart's lease payments, which were $800 million.
3. What is the approximate average interest rate on Walmart's finance leases? (Hint: See Req. 2)
4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises.
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