The net asset property under capital lease has a 2011

Reference no: EM13589613

Wal-Mart 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:

Balance Sheet ($ in millions)

2011 2010

Assets

Property:

Property under capital lease $5,509 $5,669

Less: Accumulated amortization (2,780) (2,906)

Liabilities

Current liabilities:

Obligations under capital leases due within one year 336 346

Long-term debt:

Long-term obligations under capital leases 3,150 3,170

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 2011 balance of $2,729 million ($5,509 2 2,780). Liabilities for capital leases total $3,486 ($336 1 3,150). Why do the asset and liability amounts differ?

3. Prepare a 2011 summary entry to record Walmart's lease payments, which were $600 million.

4. What is the approximate average interest rate on Walmart's capital leases? (Hint: See Req. 3)

Reference no: EM13589613

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