15-6 Real
World Case - Lease concepts; Walmart Walmart 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: Real World
Financials
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 2009 balance of $2,797 million ($5,341 −
2,544). Liabilities for capital leases total $3,515 ($315 + 3,200). Why do the
asset and liability amounts differ?
3. Prepare a 2009
summary entry to record Walmart's lease payments, which were $603 million.
4. What is the
approximate average interest rate on Walmart's capital leases? (Hint: See Req.
3)
TUTORIAL PREVIEW
Real World Case 15-6
Requirement 1
Leasing can allow a firm to conserve assets, to
avoid some risks of owning assets, and obtain favorable tax benefits. Also, leasing sometimes is used as a means of
“off-balance-sheet financing.” When
funds
