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):

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

Leasing

Leasing is a contractual arrangement in which someone (a lessee) pays the owner (or lessor) of a building, land, vehicle, or other asset for the use of that asset. The lease is the agreement between lessee and lessor.

Question

E10-30. Analyzing, Interpreting and Capitalizing Operating Leases
LO1
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).
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 leases
are as follows (in millions):
Fiscal Year
Total
2016.
$ 685
2017..
563
2018.
424
2019.
317
2020
230
Thereafter ...
443
$2,662
a. What dollar adjustment(s) might we consider to Staples' balance sheet and income statement given
this information and assuming that Staples intermediate-term borrowing rate is 8% and rounding
the remaining lease life to the nearest whole year? Explain.
b. Would the adjustment from part a make a substantial difference to Staples' total liabilities? (Staples
reported total assets of nearly $10,172 million and total liabilities of nearly $4,788 million for fiscal
2015.)

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