GlaxoSmithKline plc headquartered in London, United Kingdom, is the worlds third lagest pharmaceutical company. The company’s 2012 balance sheet reported total assets of \(£ 41,475\) million and total liabilities of \(£ 34,728\) million. The footnotes disclosed the following information related to leasing activities.

Operating leases are not reflected on-balance-sheet. In our analysis of a company, we often capitalize operating leases, that is, add the present value of the future operating lease payments to both the reported assets and liabilities.

a. Compute the present value of GlaxoSmithKline's operating payments assuming a \(6 \%\) discount rate and round the remaining lease life to three decimals.

b. What effect would capitalization of operating leases have on GlaxoSmithKline's total liabilities and total assets?

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Commitments under noncancelllable operating leases are disclosed below. 343 million (2011 - 62 million) of these commitments are provided against on the Group's balance sheet. Commitments under noncancelable operating leases Rental payments due within one year ...... Rental payments due between one and two yers Rental payments due between two and three years Rental payments due between three and four years. Rental payments due between four and five years Rental payments due after five years... Total commitments under noncancelable operating leases.... 2012 m 2011 Em 146 113 98 65 77 46 61 54 413 849 30 17 83 354