Lease Footnotes Exercise (CFA Video)
Lease Footnotes Exercise (CFA Video)
Question:
If a company disclosed the future lease payments as the following footnotes, what will be the change of liability if the operating lease were also reported as finance lease
|
|
Finance Lease |
Operating Lease |
|
Year 1 |
30 |
20 |
|
Year 2 |
50 |
30 |
|
Year 3 |
40 |
|
|
PV of future lease payments |
104 |
|
Answer:
|
|
|
When the Operating Lease is recorded as Finance Lease, the PV of the future payments will be added to both the asset and liability
PV =
20/(1+7.18%) + 30/ (1+7.18%)^2
=44.78
The liability will be increased by 44.78
November 23rd, 2009 in
2012 CFA Level 1, CFA - LEVEL 1, CFA Videos, Corporate Finance Posted by Editor
Exellent, thank you for your effort.
Exellent
Excellent