Analyze the effects on Cathay Pacific's financial statements as of December 31, 2019. In particular, look at the elements of

a) Property, Plant, and Equipment and Long-Term Liabilities

b) Operating Lease Rentals

c) Depreciation of Property, Plant, and Equipment

d) Finance Charges

e) Operating and Financing Cash Flows

 

Table 1: Estimated effects of HKFRS 16 adoption on the financial statements of Cathay Pacific as of 31 December 2019 9 Estimated increase on selected items in consolidated statement of financial position: Property, plant, and equipment Long-term liabilities Current portion of lease liability* Non-current portion of lease liability** * Repayable within 12 months. ** Repayable after 12 months. Estimated (increase)/decrease in selected items on consolidated statement of profit or loss and other comprehensive income: Operating lease rentals* Depreciation of property, plant, and equipment Finance charges * No operating lease rentals recognized in 2019. Estimated increase in selected items on consolidated statement of cash flows: Cash generated from operations (under operating activities) Interest paid (under operating activities) Loan and lease repayments (under financing activities) HKDmn 19,937 (4,073) (15,894) HKDmn 4,507 (3,849) (744) HKDmn 4,445 (744) (3,701) After adoption of HKFRS 16 in 2019, Cathay Pacific became more asset-rich, but also heavily indebted. For the statement of financial position as of 31 December 2019, its property, plant, and equipment and long-term liabilities both increased by approximately HKD20bn. Profit or loss worsened in its initial year of adoption with the increase in depreciation expense and finance charges outweighing the savings in operating lease rentals by HKD86mn. Although Cathay Pacific's net cash flow position remained the same, the reclassification of lease payments in the statement of cash flows resulted in a larger operating cash flow of HKD3.7bn for the year 2019.