What was its roa after capitalizing the operating leases

Reference no: EM131529895

Question: Human Genome Sciences, Inc., a biopharmaceutical company, discovers, develops, and markets new gene and protein-based drugs. Its 1998 annual report showed property, plant, and equipment net of accumulated depreciation of $20,965,000 with total net assets of S244,247,000. A note on operating leases revealed the following:

Operating Leases 1 The Company leases office and laboratory premises and equipi merit pursuant to operating leases expiring at various dates through 1 2017. The leases contain various renewal options. Minimum annual rentals are as follows:

Required: a. Assume that the companys cost of capital is 10 percent and that operating lease planets between 2004 and 2017 are equal amounts per year. By how much would Human Genome Sciences' property, plant, and equipment and its total net assets increase by on December 31,1998 if these leases were capitalized?

b. Assume that the company net income for 1998 was $20 million. What was its return on assets (ROA) (a) before and (b) after capitalizing the operating leases? Use straight-line depreciation over 14 years for the capitalized leases. Operating lease expense for 1998 is $5,900,000.

Reference no: EM131529895

Questions Cloud

Socio-emotional changes of adolescence impact family system : How do the many socio-emotional changes of adolescence impact family systems?

Should valuable lease options of lessees be capitalized : What considerations may have motivated the FASB to grant a four year transitional period in capitalizing pre-1977 leases meeting the capitalization tests.

Assume that the overall cost of debt is the weighted average : Assume that the overall cost of debt is the weighted average of that implied by the two outstanding debt issues.

The six stages of kohlbergs theory of moral dilemma : Is the student making the right choice in deceiving her parents?Construct a matrix that corresponds to the six stages of Kohlberg's theory of moral.

What was its roa after capitalizing the operating leases : Human Genome Sciences, Inc., a biopharmaceutical company, discovers, develops, and markets new gene and protein-based drugs.

Analyze the mission statement of the selected organization : Analyze the mission statement of the selected organization. Determine two characteristics or components of the mission statement

Minimize the number of divorces : Write an essay in which you consider the socio-emotional response by each age group regarding divorce and custody arrangements.

What is the aftertax cost of the company debt : If the corporate tax rate is 30 percent, what is the aftertax cost of the company’s debt?

Examine the role of internal environmental analysis : Examine the role of internal environmental analysis in identifying the basis for sustained competitive advantage

User Account

All Pages