YUM! Brands, Inc., reports the following information related to non-cancelable leases in Note 11 of its 2014 10-K.

On December 27, 2014, we operated nearly 8,700 restaurants, leasing the underlying land and/or building in approximately 7,775 of those restaurants with the vast majority of our commitments expiring within 20 years from the inception of the lease. In addition, the Company leases or subleases approximately 875 units to franchises principally in the United States, UK, China, and Mexico. We also lease office space for headquarters and support functions, as well as certain office and restaurant equipment. We do not consider any of these individual leases material to our operations. Most leases require us to pay related executory costs, which include property taxes, maintenance, and insurance.

a. Yum has both capital and operating leases. In general, what effects does each of these lease types have on Yum’s balance sheet and its income statement?

b. What types of adjustments might you consider to Yum’s balance sheet for analysis purposes?