Analyzing and Capitalizing Operating Lease Payments Disclosed in Footnotes

Costco Wholesale Corporation discloses the following in footnotes to its 10-K report relating
to its leasing activities.
At September 2, 2018, we operated 762 membership warehouses.
Lease Land
Own Land and and/or
Building Building Total
United States and Puerto
Rico 426 101 527
Canada 86 14 100
Mexico 38 1 39
United Kingdom 22 6 28
Japan 12 14 26
Korea 11 4 15
Taiwan - 13 13
Australia 7 3 10
Spain 2 - 2
Iceland - 1 1
France 1 - 1
Total 605 157 762

At September 2, 2018, our commitments to make future payments under contractual

obligations were as follows:
Payments Due by Fiscal Year
2024 and
201 2020 to 2022 to thereafte
Contractual obligations 9 2021 2023 r Total
$22
Operating leases 7 $407 $358 $2,215 $3,207
Capital lease obligations 34 71 72 647 824

a. From these disclosures it appears that Costco has not yet adopted the new leasing
standard. How do we know this?

Had Costco adopted the new standard, capital lease obligations and finance lease
obligations would be reported.
Had Costco adopted the new standard, operating leases and finance lease obligations
would be reported.
 Had Cost adopted the new standard, operating leases, capital lease obligations, and
finance lease obligations would be reported.
Based on the lease types disclosed, it appears Costco has adopted the new standard.
  
b. How would Costco determine if each of the lease contracts listed under Lease Land
and/or Building would be a finance lease or an operating lease?
Finance leases meet one or more of five criteria.  Which of the following is not one of the
criteria? 

The lease term is for a major part of the remaining economic life of the underlying asset.
The present value of the sum of the lease payments and any residual value guaranteed
by the lessee that is not already included in the lease payments equals or exceeds
substantially all of the fair value of the underlying asset.
The underlying asset is of such that the company expects the asset to have an
alternative use to the lessor at the end of the lease term.
The lease transfers ownership of the underlying asset to the lessee by the end of the
lease term.
The lease grants the lessee an option to purchase the underlying asset that the lessee
is reasonably certain to exercise.

c. From the disclosures details, do you think the Lease Land and/or Building leases are
operating or finance lease?