M A Ivy Ivy Company Reports the Following in Its 2016 Annual

Essay

M. A. Ivy Company reports the following in its 2016 annual report:
For 2015 and 2016, the Company incurred rent expense of $1,486 and $1,758 (in thousands), respectively.
A. Calculate the present value of operating lease payments using a discount rate of 4%.
B. M. A. Ivy Company's balance sheet reports total assets of $46,640,000 and total liabilities of $11,377,500. Calculate the change in the company's assets and liabilities with the operating leases being capitalized.
C. Assume that the leased equipment has a useful life of 12 years and no salvage value. Assume straight-line depreciation. Estimate the effect on net operating profit before tax in 2016, of capitalizing these operating leases.
D. Estimate the effect on interest expense of capitalizing these operating leases.