Dow Chemical Company provided the following footnote in its 2012 10-K report relating to operating leases. a.
Question:
Dow Chemical Company provided the following footnote in its 2012 10-K report relating to operating leases.
a. Dow describes all of its leases as "operating." What is the significance of this designation?
b. How might we treat these operating leases in our analysis of the company?
Transcribed Image Text:
Leased Property The Company routinely leases premises for use as sales and adminis- trative offices, warehouses and tanks for product storage, motor vehicles, railcars, com- puters, office machines, and equipment under operating leases. In addition, the Company leases aircraft in the United States. At the termination of the leases, the Company has the option to purchase certain leased equipment and buildings based on a fair market value determination. Rental expenses under operating leases, net of sublease rental income, were $476 million in 2012, $437 million in 2011 and $404 million in 2010. Future minimum rental payments under operating leases with remaining noncancelable terms in excess of one year are as follows:
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Financial And Managerial Accounting For MBAs
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Authors: Peter D. Easton
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