oplease - $2,000.00 Output Number of years embedded in yr 6...

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Operating Lease Converter Operating lease expenses are really financial expenses, and should be treated as such. Accounting standards allow them to be treated as operating expenses. This program will convert commitments to make operating leases into debt and adjust the operating income accordingly, by adding back the imputed interest expense on this debt. Inputs Operating lease expense in current year = $2,500.00 Operating Lease Commitments (From footnote to financials) Year Commitment ! Year 1 is next year, …. 1 $2,000.00 2 $2,000.00 3 $2,000.00 4 $1,800.00 5 $1,600.00 6 and beyond $8,000.00 Pre-tax Cost of Debt = 5.48% From the current financial statements, enter the following Reported Operating Income (EBIT) = $10,000.00 ! This is the EBIT reported in the current income statement Reported Debt = $25,000.00 ! This is the interest-bearing debt reported on the balance sheet Reported Interest Expenses =
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Unformatted text preview: $2,000.00 Output Number of years embedded in yr 6 estimate 4 ! I use the average lease expense over the first five years to estimate the number of years of expenses in yr 6 Converting Operating Leases into debt Year Commitment Present Value 1 $2,000.00 $1,896.09 2 $2,000.00 $1,797.59 3 $2,000.00 $1,704.20 4 $1,800.00 $1,454.09 5 $1,600.00 $1,225.38 6 and beyond $2,000.00 $5,371.39 ! Commitment beyond year 6 converted into an annuity for ten years Debt Value of leases = $13,448.73 Restated Financials Operating Income with Operating leases reclassified as debt = $10,736.99 Debt with Operating leases reclassified as debt = $38,448.73 Full Operating lease adjustment Reported Operating income = $10,000.00 + Current year's operating lease expense = $2,500.00 - Depreciation on leased asset = $1,494.30 Adjusted Operating Income $11,005.70...
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