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Category > Business & Finance Posted 30 May 2017 My Price 12.00

The Ellis Corporation has heavy lease commitments. Prior to SFAS

The Ellis Corporation has heavy lease commitments. Prior to SFAS No. 13, it merely footnoted lease obligations in the balance sheet, which appeared as follows: Use Appendix D.

 

In $ millions In $ millions
Current assets $ 75 Current liabilities $ 15
Fixed assets   75 Long-term liabilities   45
 
 
      Total liabilities $ 60
      Stockholders' equity   90
       
Total assets $ 150 Total liabilities and
stockholders' equity		 $ 150
 
 

 

The footnotes stated that the company had $33 million in annual capital lease obligations for the next 20 years.

 

(a)

Discount these annual lease obligations back to the present at a 8 percent discount rate. (Enter your answers in millions rounded to nearest whole number. Round "PV Factor" to 3 decimal places. Omit the "$" sign in your response.)

 

Annual lease obligations $ million

 

(b)

Construct a revised balance sheet that includes lease obligations. (Enter your answers in millions rounded to nearest whole number. Round "PV Factor" to 3 decimal places. Omit the "$" sign in your response.)

 

Balance Sheet (in millions)
Current assets $ Current liabilities $
Fixed assets   Long-term liabilities  
Leased property
under capital lease		   Obligations under
capital lease		  
 
 
    Total liabilities  
    Stockholders' equity  
     
Total assets $ Total liabilities and
Stockholders' equity		 $
 
 

 

(c)

Compute total debt to total assets on the original and revised balance sheets. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

 

Original %
Revised %

 

(d)

Compute total debt to equity on the original and revised balance sheets. (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

 

Original %
Revised %

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Status NEW Posted 30 May 2017 04:05 AM My Price 12.00

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