Wal Mart Stores leases most of its office warehouse and

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Wal-Mart Stores leases most of its office, warehouse, and retail space under a combination of
capital and operating leases. The disclosures related to capital leases for its fiscal year ending
January 31, Year 5 follow (amounts in millions):The weighted average discount rate used to
compute the present value of the capitalized lease obligation was 7.25 percent. Assume that
new leases capitalized and lease payments occur evenly throughout the year.Requireda.
Prepare an analysis that explains the change in the following accounts during Year 5.(1)
Property, Plant, and Equipment under Capital Leases(2) Accumulated Depreciation(3)
Capitalized Lease Obligationb. Assume that Wal-Mart treats these capitalized leases as
operating leases for income tax purposes. The income tax rate is 35 percent. Compute the total
amount of pretax expenses related to these leased assets for financial and tax reporting for
Year 5.c. Compute the amount of deferred tax asset and/or deferred tax liability that Wal-Mart
would report on its January 31, Year 5, balance sheet related to these leases.View Solution:
Wal Mart Stores leases most of its office warehouse and retail

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