Presented in Illustration 21.39 are the financial statement disclosures from the 2015 annual report of Delhaize Group
Question:
Illustration 21.39
Instructions
Answer the following questions related to these disclosures.
a. What is the total obligation under finance leases at year-end 2015 for Delhaize?
b. What is the total rental expense reported for leasing activity for the year ended December 31, 2015, for Delhaize?
c. Estimate the off-balance-sheet liability due to Delhaize operating leases at fiscal year-end 2015.
Transcribed Image Text:
Delhaize Group (Partial) (in millions) 2015 Non-Current Liabilities Long-term obligations under finance leases, €480 less current portion Current Liabilities Current obligations under finance leases €75 18.3 Leases Delhaize Group operates a significant number of its stores under finance and operating lease arrangements. Various properties leased are (partially or fully) subleased to third parties, where the Group is therefore acting as a lessor (see further below). Lease terms (including reasonably certain renewal options) generally range from 1 to 45 years with renewal options ranging from 3 to 30 years. The schedule below provides the future minimum lease payments, which were not reduced by expected minimum sublease income of €50 million, due over the term of non-cancellable subleases, as of December 31, 2015: General description (in millions of €) 2020 Thereafter Total 2016 2017 2018 2019 Finance leases Future minimum lease payments Less amount representing interest 125 (50) 104 91 80 72 530 1,002 (447) (46) (41) (241) (37) (32) Present value of minimum lease payments Of which related to closed store lease obligations Operating leases Future minimum lease payments (for non-cancellable leases) Of which related to closed store lease obligations 75 58 50 43 40 289 555 Reconciliation, timing, and amounts of cash outflows 6. 30 56 320 263 217 162 120 481 1,563 20 17 34 14 101 The average effective interest rate for finance leases was 10.9% at December 31, 2015. The fair value of the Group's finance lease obligations using an average market rate of 4.6% at December 31, 2015 was €728 million. Rent payments, including scheduled rent increases, are recognized on a straight-line basis over the minimum lease term. Total rent expense under operating leases was €352 million in 2015, being included predominately in "Selling, general and administrative expenses." Additional information in
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a The total obligations under finance leases at yearend 2015 for Delhaize is 555 million the present ...View the full answer
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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