Calculate the liabilities potentially left off balance sheet

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Reference no: EM132708695

American Eagle Outfitters reported the following operating lease information in a footnote to the 2016 annual report (in thousands):

Fiscal Years: Future Minimum Lease Payments

2017                       $287,822

2018                        260,847

2019                          228,085

2020                      207,029

2021                 182,219

Thereafter                 489,739

Total                       $1,655,741

REQUIRED:

Problem a. Calculate the liabilities potentially left off the balance sheet due to operating leases. Assume that the company's implicit discount rate on leases is 6% and round the remaining lease term to the nearest whole year.

Problem b. American Eagle Outfitters' balance sheet reveals that the company has $1,782,660 thousand total assets and $578,091 thousand total liabilities. What proportion of assets are liabilities are on balance sheet versus off balance sheet?

Reference no: EM132708695

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