Access the annual financial statements, including the accompanying notes, of Loblaw Companies Limited for its 52 weeks ended December 30, 2017. These can be found on SEDAR (www.sedar.com) or the company’s website. Review the principal statements and the notes for all disclosures associated with leases. 

Instructions 

a. Does Loblaw refer to the new Leases standard, IFRS 16? If so, what disclosures are made relative to it? 

b. Is Loblaw a lessee or a lessor, or both? What types of assets does the company lease, and what categories or classifications of leases are reported? Identify all accounts on the consolidated balance sheets and the consolidated statement of earnings, along with their dollar amounts, that relate to any lease agreements that the company is a party to.

c. Identify the line account(s) on the consolidated statements of cash flows where the cash lease payments are reported. Explain your answer. 

d. Calculate Loblaw’s return on total assets and total debt to equity ratios for 2017. 

e. With the required adoption of the new Leases standard, IFRS 16, in 2019, would you expect there to be much of an effect on Loblaw’s financial statements? If so, what would the impact be? Attempt to determine the financial effect of any change, assuming a capitalization/discount rate of 4% semi-annually, with lease payments being made at the end of each six-month period (and stating your other assumptions, if any). Compare your results with the ratios calculated above for the company’s 52 weeks ending December 30, 2017, and briefly comment.