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Analyzing, Interpreting, and Capitalizing Operating Leases Goldman...

Analyzing, Interpreting, and Capitalizing Operating Leases

Goldman Sachs' SEC filing for the quarter ended March 31

Required

b. What operating lease liability did Goldman Sachs report for the quarter ended March 31, 2019?

c. How does Goldman Sachs determine the amount of operating lease liabilities to add to its balance

sheet?

d. Use an Excel spreadsheet and the information on future operating lease payments to verify the total

liabilities of $2,413 million on the 2019 Form 10-Q. Hint: The amount might not be exactly $2,413.

e. What right-of-use assets did Goldman Sachs report for the quarter ended March 31, 2019? Given

Goldman Sachs' business, what does the company lease under its operating leases?

f. Why might the right-of-use asset amount that Goldman Sachs added to the January 2019 balance sheet

differ from the related operating lease liabilities?

g. Use the information on rental payments from the December 2018 Form 10-K, to calculate the present

value of future payments at year-end. Use the same average weighted lease term and discount rate

Goldman Sachs discloses in the 2019 Form 10-Q.

h. How would we adjust the December 2018 balance sheet to enhance comparability?

Image transcription text

Analyzing, Interpreting, and Capitalizing Operating Leases Goldman Sachs' SEC filing for the quarter ended March 31. 2019. report contains the following lease The table below presents other liabilities by type. footnote. $ in millions March 2019 December 2018 Leases (ASC 842). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This $ 3,110 $ 6.834 ASU requires that, for leases longer than one year, a lessee recognize in the statements of financial Compensation and benefits . . . . . . . . . . . . . . . . . . . . . 2.864 condition a right-of-use asset and a lease liability. It also requires that for finance leases, a lessee rec- Income tax-related liabilities. . . . 3,080 ognize interest expense on the lease liability, separately from the amortization of the right-of-use asset Operating lease liabilities. 2.413 in the statements of earnings, while for operating leases, such amounts should be recognized as a com- Noncontrolling interests . . 1.565 1.568 bined expense. The firm adopted this ASU in January 2019 under a modified retrospective approach. Employee interests in consolidated funds 122 122 The table below presents other assets by type. Accrued expenses and other . . . . 5.884 6.219 Total . . . . .. $16.174 $17.607 S in millions March 2019 December 2018 Property, leasehold improvements and equipment . . . $19.277 $18,317 The table below presents information about future operating lease payments. Held-to-maturity securities ............ .835. 5,841 1,288 Goodwill and identifiable intangible assets. . . . . . . . . . 4.092 4,082 2.386 $ in millions March 2019 Operating lease right-of-use assets . Income tax-related assets . . . . . . . ... 1,729 1,529 Remainder of 2019. S 318 Miscellaneous receivables and other...... . ... . ... 4.358 5,424 2020 . . . . . 341 $37,683 $30,640 2021 . . . . . . . . 262 Total . . . . . . 2022 . . . . . .. . 235 2023 . . . . . . . 204 The table below presents other liabilities by type. 2024 . . . . 193 2.494 March 2019 2025-thereafter . $ in millions December 2018 Total undiscounted lease payments. . 4.047 Compensation and benefits $ 3,110 $ 6,834 Imputed interest . . .. (1,634) Income tax-related liabilities. 3,080 2.864 Total operating lease liabilities . . . $ 2.413 Operating lease liabilities . 2,413 Noncontrolling interests . . 1,565 1,568 Saved Employee interests in consolidated funds 122 122 Weighted average remaining lease term .. . . 18 years Accrued expenses and other . . . 5.884 6.219 Weighted average discount rate.. .... . . . .. . . . . ... 4.85% $16,174 $17,607 Goldman Sachs's 10-K report for the year ended December 31, 2018, included the following table about future cash payments required under operating leases. The table below presents future minimum rental payments, net of minimum sublease rentals. $ in millions December 2018 2019 .. . . . $ 281 2020. 271 2021 . 218 2022 . 177 2023 . . . . . 142 2024 - thereafter 1,310 Total . . . . $2.399

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