“Why does FedEx show operating cash flows for both types of leases, but only financing cash flows for finance leases,” your colleague wonders aloud. “We need to draft our lease disclosure by tomorrow morning.” Tossing a sheet of paper in front of you, he moans, “I found this disclosure note to FedEx’s financial statements that promises ‘supplemental cash flow information related to leases,’ but it’s not helping. The department’s draft of our cash flow statement, and the income statement for that matter, don’t specifically break out any lease payments. This being our first time to follow the new lease standard, we need to get it right. And while we’re at it, why do you think they list new leases in connection with cash flows? Did they pay all this cash in addition to incurring lease liabilities for the right-of-use assets?” Knowing your colleague is a new hire, you want to diplomatically point him in the right direction. So, you pick up the disclosure note:

Required:
1. Why does FedEx show operating cash flows for both types of leases, but only financing cash flows for finance leases?
2. To aid in your explanation, prepare a journal entry that summarizes the cash payments for operating leases during the year.
3. To aid in your explanation, prepare a journal entry that summarizes the cash payments for finance leases during the year.
4. Did FedEx pay the amounts indicated in addition to incurring lease liabilities for the right-of-use assets for new leases? Why or why not?
5. To aid in your explanation, prepare a journal entry that summarizes the acquisition of assets by operating
leases during the year.

Note 7 - LEASES (in part) Supplemental cash flow information related to leases is as follows: (In millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows paid for operating leases Operating cash flows paid for finance leases Financing cash flows paid for finance leases Right-of-use assets obtained in exchange for new operating leases Right-of-use assets obtained in exchange for new finance leases Fiscal Year Ended May 31, 2020 $2,608 14 84 1,915 484