Please provide the solutions in bold. I already got the infromation fro the 10K
ID: 2444650 • Letter: P
Question
Please provide the solutions in bold. I already got the infromation fro the 10K report just need a few easy questions completed. Please show all work/calculations
Problem 1:
Refer to the balance sheet and note 11 (Commitments) of Wal-Mart in Appendix.
Required:
Did Wal-Mart report a liability for its operating lease on January 31, 2015 balance sheet? By how much? Yes 2606
Did Wal-Mart report a liability for its capital lease on January 31, 2015 balance sheet? By how much? Yes the operating lease was
Did Wal-Mart report an asset for its operating lease on January 31, 2015 balance sheet? By how much?
Did Wal-Mart report an asset for its capital lease on January 31, 2015 balance sheet? By how much?
Assuming an interest rate of 5%, compute the present value of the operating lease commitments on January 31, 2015. Show all calculations for credit.
Assuming that Wal-Mart was required to capitalize its operating lease, calculate the company’s 2015’s Liabilities to Assets ratio and Long-term Debt Ratio.
Appendix
Wal-Mart Stores, Inc.
Consolidated Balance Sheets
As of January 31,
(Amounts in millions)
2015
2014
ASSETS
Current assets:
Cash and cash equivalents
$
9,135
$
7,281
Receivables, net
6,778
6,677
Inventories
45,141
44,858
Prepaid expenses and other
2,224
1,909
Current assets of discontinued operations
—
460
Total current assets
63,278
61,185
Property and equipment:
Property and equipment
177,395
173,089
Less accumulated depreciation
(63,115
)
(57,725
)
Property and equipment, net
114,280
115,364
Property under capital leases:
Property under capital leases
5,239
5,589
Less accumulated amortization
(2,864
)
(3,046
)
Property under capital leases, net
2,375
2,543
Goodwill
18,102
19,510
Other assets and deferred charges
5,671
6,149
Total assets
$
203,706
$
204,751
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Current liabilities:
Short-term borrowings
$
1,592
$
7,670
Accounts payable
38,410
37,415
Accrued liabilities
19,152
18,793
Accrued income taxes
1,021
966
Long-term debt due within one year
4,810
4,103
Obligations under capital leases due within one year
287
309
Current liabilities of discontinued operations
—
89
Total current liabilities
65,272
69,345
Long-term debt
41,086
41,771
Long-term obligations under capital leases
2,606
2,788
Deferred income taxes and other
8,805
8,017
Redeemable noncontrolling interest
—
1,491
Commitments and contingencies
Equity:
Common stock
323
323
Capital in excess of par value
2,462
2,362
Retained earnings
85,777
76,566
Accumulated other comprehensive income (loss)
(7,168
)
(2,996
)
Total Walmart shareholders' equity
81,394
76,255
Nonredeemable noncontrolling interest
4,543
5,084
Total equity
85,937
81,339
Total liabilities, redeemable noncontrolling interest, and equity
$
203,706
$
204,751
See accompanying notes.
Note 1. Summary of Significant Accounting Policies
......
Property and Equipment
Property and equipment are stated at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are charged to expense as incurred. The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis:
Fiscal Years Ended January 31,
(Amounts in millions)
Estimated Useful Lives
2015
2014
Land
N/A
$
26,261
$
26,184
Buildings and improvements
3-40 years
97,496
95,488
Fixtures and equipment
2-30 years
45,044
42,971
Transportation equipment
3-15 years
2,807
2,785
Construction in progress
N/A
5,787
5,661
Property and equipment
$
177,395
$
173,089
Accumulated depreciation
(63,115
)
(57,725
)
Property and equipment, net
$
114,280
$
115,364
Leasehold improvements are depreciated over the shorter of the estimated useful life of the asset or the remaining expected lease term. Depreciation expense for property and equipment, including amortization of property under capital leases, for fiscal 2015, 2014 and 2013 was $9.1 billion, $8.8 billion and $8.4 billion, respectively. Interest costs capitalized on construction projects were $59 million, $78 million and $74 million in fiscal 2015, 2014 and 2013, respectively.
Note 9. Taxes
Income from Continuing Operations
The components of income from continuing operations before income taxes are as follows:
Fiscal Years Ended January 31,
(Amounts in millions)
2015
2014
2013
U.S.
$
18,610
$
19,412
$
19,352
Non-U.S.
6,189
5,244
6,310
Total income from continuing operations before income taxes
$
24,799
$
24,656
$
25,662
A summary of the provision for income taxes is as follows:
Fiscal Years Ended January 31,
(Amounts in millions)
2015
2014
2013
Current:
U.S. federal
$
6,165
$
6,377
$
5,611
U.S. state and local
810
719
622
International
1,529
1,523
1,743
Total current tax provision
8,504
8,619
7,976
Deferred:
U.S. federal
(387
)
(72
)
38
U.S. state and local
(55
)
37
(8
)
International
(77
)
(479
)
(48
)
Total deferred tax expense (benefit)
(519
)
(514
)
(18
)
Total provision for income taxes
$
7,985
$
8,105
$
7,958
Deferred Taxes
The significant components of the Company's deferred tax account balances are as follows:
January 31,
(Amounts in millions)
2015
2014
Deferred tax assets:
Loss and tax credit carryforwards
$
3,255
$
3,566
Accrued liabilities
3,395
2,986
Share-based compensation
184
126
Other
1,119
1,573
Total deferred tax assets
7,953
8,251
Valuation allowances
(1,504
)
(1,801
)
Deferred tax assets, net of valuation allowance
6,449
6,450
Deferred tax liabilities:
Property and equipment
5,972
6,295
Inventories
1,825
1,641
Other
1,618
1,827
Total deferred tax liabilities
9,415
9,763
Net deferred tax liabilities
$
2,966
$
3,313
The deferred taxes are classified as follows in the Company's Consolidated Balance Sheets:
January 31,
(Amounts in millions)
2015
2014
Balance Sheet classification:
Assets:
Prepaid expenses and other
$
728
$
822
Other assets and deferred charges
1,033
1,151
Asset subtotals
1,761
1,973
Liabilities:
Accrued liabilities
56
176
Deferred income taxes and other
4,671
5,110
Liability subtotals
4,727
5,286
Net deferred tax liabilities
$
2,966
$
3,313
Note 11. Commitments
The Company has long-term leases for stores and equipment. Rentals (including amounts applicable to taxes, insurance, maintenance, other operating expenses and contingent rentals) under operating leases and other short-term rental arrangements were $2.8 billion in both fiscal 2015 and 2014 and $2.6 billion in fiscal 2013.
Aggregate minimum annual rentals at January 31, 2015, under non-cancelable leases are as follows:
(Amounts in millions)
Fiscal Year
Operating Leases
Capital Leases
2016
$
1,759
$
504
2017
1,615
476
2018
1,482
444
2019
1,354
408
2020
1,236
370
Thereafter
10,464
3,252
Total minimum rentals
$
17,910
$
5,454
Less estimated executory costs
49
Net minimum lease payments
5,405
Less imputed interest
2,512
Present value of minimum lease payments
$
2,893
Certain of the Company's leases provide for the payment of contingent rentals based on a percentage of sales. Such contingent rentals were not material for fiscal 2015, 2014 and 2013. Substantially all of the Company's store leases have renewal options, some of which may trigger an escalation in rentals.
The Company has future lease commitments for land and buildings for approximately 282 future locations. These lease commitments have lease terms ranging from 1 to 30 years and provide for certain minimum rentals. If executed, payments under operating leases would increase by $58 million for fiscal 2016, based on current cost estimates.
In connection with certain long-term debt issuances, the Company could be liable for early termination payments if certain unlikely events were to occur. At January 31, 2015, the aggregate termination payment would have been $64 million. The arrangement pursuant to which this payment could be made will expire in fiscal 2019.
As of January 31,
(Amounts in millions)
2015
2014
ASSETS
Current assets:
Cash and cash equivalents
$
9,135
$
7,281
Receivables, net
6,778
6,677
Inventories
45,141
44,858
Prepaid expenses and other
2,224
1,909
Current assets of discontinued operations
—
460
Total current assets
63,278
61,185
Property and equipment:
Property and equipment
177,395
173,089
Less accumulated depreciation
(63,115
)
(57,725
)
Property and equipment, net
114,280
115,364
Property under capital leases:
Property under capital leases
5,239
5,589
Less accumulated amortization
(2,864
)
(3,046
)
Property under capital leases, net
2,375
2,543
Goodwill
18,102
19,510
Other assets and deferred charges
5,671
6,149
Total assets
$
203,706
$
204,751
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY
Current liabilities:
Short-term borrowings
$
1,592
$
7,670
Accounts payable
38,410
37,415
Accrued liabilities
19,152
18,793
Accrued income taxes
1,021
966
Long-term debt due within one year
4,810
4,103
Obligations under capital leases due within one year
287
309
Current liabilities of discontinued operations
—
89
Total current liabilities
65,272
69,345
Long-term debt
41,086
41,771
Long-term obligations under capital leases
2,606
2,788
Deferred income taxes and other
8,805
8,017
Redeemable noncontrolling interest
—
1,491
Commitments and contingencies
Equity:
Common stock
323
323
Capital in excess of par value
2,462
2,362
Retained earnings
85,777
76,566
Accumulated other comprehensive income (loss)
(7,168
)
(2,996
)
Total Walmart shareholders' equity
81,394
76,255
Nonredeemable noncontrolling interest
4,543
5,084
Total equity
85,937
81,339
Total liabilities, redeemable noncontrolling interest, and equity
$
203,706
$
204,751
Explanation / Answer
The operating lease is what the walmart is creating its liability but to calculate the present value of the operating lease we need cash flow statement for the financial year and also if not cash flow then the sales and other expenses for the period .
Thew liability what the wlmart has recorded and created would be 2606 as per the given question but for further question to be resolved the cash inflow and outflow needs to be calculated
And the interest at which the opportunity cost in involved that needs to be taken as the present value factor and arrive at the net present value and can also be discounted at the internal rate of return or the expected or return on investment .
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