We have operating and finance leases for datacenters, corporate offices, reasearch and development facilities, retail stores, and certain equipment. Our leases have remaining lease terms of $1$ year to $20$ years, some of which include options to extend the leases for up to $5$ years, and some of which include options to terminate the leases within $1$ year.

The components of lease expense were as follows:

$($$ in millions$)202020192018$

Year Ended June $30,$ Operating lease cost $ $2,043$ $ $1,707$ $ $1,585$

Finance lease cost:

Amortization of right$-$of$-$use assets $ $611$ $ $370$ $ $243$

Interest on lease liabilities $336247175$

Total finance lease cost $ $947$ $ $617$ $ $418$

Supplemental cash flow information related to leases was as follows:

$($$ in millions$)202020192018$

Cash paid for amounts included in the measurements of lease liabillities:

Operating cash flows from operating leases $ $1,829$ $ $1,670$ $ $1,522$

Operating cash flows from finance leases $336247175$

Financing cash flows from finance leases $409221144$

Maturities of lease liabilities were as follows:

$($$ in millions$)$ Operating Leases Finance Leases

Year Ended June $30,$ 

$2021$ $ $1,807$ $ $880$

$20221,652894$

$20231,474903$

$20241,262916$

$20251,0001,236$

Thereafter $3,1227,194$

Total leases payments $10,31712,023$

Leass imputed interest $(1,030)(2,527)$

Total $ $9,287$ $ $9,496$

Required:

What do you notice about the trends in operating versus finance leases for Microsoft?

Prepare a journal entry that summarizes the lease payments for Microsoft$’$s finance leases during $2020.$

Prepare a journal entry that summarizes the amortization of the right$-$of$-$use assets for Microsoft$’$s finance leases during $2020.$

 

Answer rating: 100% (QA)

Trends in Operating versus Finance Leases for Microsoft 1 Operating Lease Costs There is an increasing trend in operating lease costs over the past three years from 1585 million in 2018 to 2043 millio... View the full answer