Refer to the Table below from Hilton Worldwide Holdings, Inc.’s 2020 Annual Report (Note 12 of the notes to the financial statements). Using the information provided, answer the following questions:

1. What is the present value of the future minimum finance lease payments for Hilton?

2. Suppose that the finance lease payments after 2025 will be equally paid over the next 5 years. Calculate the finance lease discount rate for Hilton. Please round your answer to two decimal places.

3. What is the journal entry for finance lease payment in fiscal year 2021? Assume payments are made annually.

HILTON WORLDWIDE HOLDINGS, INC.

NOTES TO FINANCIAL STATEMENTS

Note 12 : Leases

We lease hotel properties, land, corporate office space and equipment used at hotels and corporate offices, with our most significant lease liabilities related to hotel properties. As of December 31, 2020, we leased 48 hotels under operating leases and six hotels under finance leases, two of which were the liabilities of consolidated VIEs and were non-recourse to us. Our hotel leases expire at various dates, with varying renewal and termination options.

Our future minimum lease payments as of December 31, 2020 were as follows. 

Part VI: Accounting for Leases

Transcribed Image Text:

Year 2021 2022 2023 2024 2025 Thereafter Total minimum lease payments Less: imputed interest Total lease liabilities Operating Leases (in millions) 210 S 156 140 118 117 724 1,465 (324) Finance Leases 1,141 68 42 33 31 32 111 317 (65) 252 Year 2021 2022 2023 2024 2025 Thereafter Total minimum lease payments Less: imputed interest Total lease liabilities Operating Leases (in millions) 210 S 156 140 118 117 724 1,465 (324) Finance Leases 1,141 68 42 33 31 32 111 317 (65) 252

Answer rating: 100% (QA)

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