Chapter 10, Problem 4CTC

a)

To determine

Explain whether the appearance and potential interpretation of Airlines D’s balance sheet have changed or not, if Airlines D has structured its aircraft commitments as capital leases instead of operating leases.

b)

To determine

Explain whether it is ethical for Delta to structure less than $291 million of its aircraft commitments as capital leases and the remaining as off-balance sheet financing or not.

c)

To determine

Explain the importance of understanding the footnotes accompanying Airlines D’s financial statements for investors and creditors.