Capitalizing Operating Leases

(Lease expense may be included in another expense category, such as SG&A, etc.) Calculate the implied interest expense portion of the 2000 payment. Here, it’s $6,625.2MM x 7.00% = $463.8MM. Since the total payment was $886.4MM, the difference of $422.6MM should be added to depreciation expense. Result – no change in net income. ................
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