Question: NOTE: For this problem, refer to the present value tables at the end of this exam, as needed. Listed below are selected financial data for
- NOTE: For this problem, refer to the present value tables at the end of this exam, as needed.
Listed below are selected financial data for Purple Corporation and the company's operating lease disclosure (all amounts in thousands). The companys tax rate is 35%.
|
| 2012 | 2011 |
| Property, Plant, & Equipment (net) | $178,000 | $162,000 |
| Total Assets | 515,000 | 424,000 |
| Long-Term Debt (Current and Non-Current) | 75,000 | 67,000
|
| Common Shareholders Equity | 302,000 | 298,000 |
|
| Operating Lease Commitments |
|
| at the end of 2012 |
|
|
|
| Year | Reported Lease Commitments |
| 2013 | $ 30,000 |
| 2014 | $ 20,000 |
| 2015 | $ 20,000 |
| 2016 | $ 15,000 |
| 2017 | $ 10,000 |
| Beyond 2017 | $ 35,000 |
As an analyst, you have decided to restate the company's operating leases into capital leases. Using the information in the operating lease disclosure and assuming that the company has an incremental borrowing rate for secured debt of 8%, restate the operating leases into capital leases and calculate the adjusted values of the following as of the end of 2012:
| a. | Plant, Property and Equipment. |
| b. | Long-Term Debt (It is not necessary to split this into Current and Non-Current Portions). |
| c. | Shareholders Equity. |
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