Valuation Tools Webcast #4: Capitalizing Leases
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- čas přidán 25. 09. 2014
- Accountants routinely miscategorize leases and treat them as operating expenses (instead of financial expenses). In this webcast, I look at the process of capitalizing leases and how it affects earnings, debt and invested capital. I use Disney's annual report from 2012 to illustrate the process:
Disney annual report (2012): www.stern.nyu.edu/~adamodar/pd...
Spreadsheet: www.stern.nyu.edu/~adamodar/pd...
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He just made a prophecy. This was adopted by the IFRS last 2018 but he was talking about it 6 years ago
Awesome! Very helpful explanation!
excellent expose
thanks so much!
One thing missing in the lecture is how treating leases as debt financed capital investment should affect cash flow statement.
Thank you for the material!
One question : why is the value for operating income used in the calculation of the interest coverage ratio differs from the one on the "operating lease" sheet on cell D40?
So we add a liability to the balance sheet in case we have operating leases. But the balance has to be balanced. Are we adding the same figure to assets, or rather deducting equity?
Hi Mr. D.
With IFRS 16 implemented, this is now done for us. My question is: Is there a correct method for calculation 'lease capex' related to entering into new leases (which would not be captured by the lease liability on the balance sheet)?
thanks!
spreadsheet link is broken or incomplete
Professor, I have a problem where, in the financial statement, the lease commitments aren't broken-down, so I could not determine the Present Value of those contracts.
Dear Professor,
Once you capitalize these expenses, what other adjustments should take place in order to make the balance sheet even?
i think your balance sheet is not even due to depreciation. so you should decrease the lease asset by depreciation. and in your balance sheet the adjusted Net Income should be replaced by non adjusted net income. I think this will make your balance sheet even.
Why wouldn't we include present year in the depreciation calculation? It seems like we're bringing forward future depreciation into today, but not accounting for present year's expense.