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?

Analyzing, Interpreting, and Capitalizing Operating Leases Goldman Sachs' SEC filing for the quarter ended March 31, 2019, report contains the following lease footnote. The table below presents other liabilities by type. $ in millions December 2018 $ 6,834 2,864 Leases (ASC 842). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires that, for leases longer than one year, a lessee recognize in the statements of financial condition a right-of-use asset and a lease liability. It also requires that for finance leases, a lessee rec- ognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a com- bined expense. The firm adopted this ASU in January 2019 under a modified retrospective approach. The table below presents other assets by type. Compensation and benefits Income tax-related liabilities Operating lease liabilities ... Noncontrolling interests ......... Employee interests in consolidated funds Accrued expenses and other .......... Total .... March 2019 $ 3,110 3,080 2,413 1,565 122 5,884 $16,174 1,568 122 6.219 $17.607 December 2018 The table below presents information about future operating lease payments Sin millions March 2019 Property, leasehold improvements and equipment... $19,277 Held-to-maturity securities ........... 5,841 Goodwill and identifiable intangible assets. 4,092 Operating lease right-of-use assets 2,386 Income tax-related assets..... 1.729 Miscellaneous receivables and other.... 4.358 $37,683 March 2019 $18,317 1,288 4,082 - 1,529 5,424 $30,640 $ in millions Remainder of 2019.. 2020 2021 2022 2023 Total ... The table below presents other liabilities by type $ 318 341 262 235 204 193 2.494 4,047 (1,634) 2024 ... March 2019 December 2018 $ 6,834 2,864 2025-thereafter Total undiscounted lease payments Imputed interest ... Total operating lease liabilities.. Sin millions Compensation and benefits Income tax-related liabilities Operating lease liabilities Noncontrolling interests Employee interests in consolidated funds Accrued expenses and other Total ... $ 3,110 3,080 2,413 1,565 122 5,884 $16,174 $ 2,413 Saved 18 years 1,568 122 6.219 $17,607 $ Weighted average remaining lease term Weighted average discount rate...... 4.85% 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. December 2018 $ in millions 2019 2020 2021 2022 $ 281 271 218 177 142 1.310 $2.399 2023... 2024-thereafter Total Analyzing, Interpreting, and Capitalizing Operating Leases Goldman Sachs' SEC filing for the quarter ended March 31, 2019, report contains the following lease footnote. The table below presents other liabilities by type. $ in millions December 2018 $ 6,834 2,864 Leases (ASC 842). In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This ASU requires that, for leases longer than one year, a lessee recognize in the statements of financial condition a right-of-use asset and a lease liability. It also requires that for finance leases, a lessee rec- ognize interest expense on the lease liability, separately from the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized as a com- bined expense. The firm adopted this ASU in January 2019 under a modified retrospective approach. The table below presents other assets by type. Compensation and benefits Income tax-related liabilities Operating lease liabilities ... Noncontrolling interests ......... Employee interests in consolidated funds Accrued expenses and other .......... Total .... March 2019 $ 3,110 3,080 2,413 1,565 122 5,884 $16,174 1,568 122 6.219 $17.607 December 2018 The table below presents information about future operating lease payments Sin millions March 2019 Property, leasehold improvements and equipment... $19,277 Held-to-maturity securities ........... 5,841 Goodwill and identifiable intangible assets. 4,092 Operating lease right-of-use assets 2,386 Income tax-related assets..... 1.729 Miscellaneous receivables and other.... 4.358 $37,683 March 2019 $18,317 1,288 4,082 - 1,529 5,424 $30,640 $ in millions Remainder of 2019.. 2020 2021 2022 2023 Total ... The table below presents other liabilities by type $ 318 341 262 235 204 193 2.494 4,047 (1,634) 2024 ... March 2019 December 2018 $ 6,834 2,864 2025-thereafter Total undiscounted lease payments Imputed interest ... Total operating lease liabilities.. Sin millions Compensation and benefits Income tax-related liabilities Operating lease liabilities Noncontrolling interests Employee interests in consolidated funds Accrued expenses and other Total ... $ 3,110 3,080 2,413 1,565 122 5,884 $16,174 $ 2,413 Saved 18 years 1,568 122 6.219 $17,607 $ Weighted average remaining lease term Weighted average discount rate...... 4.85% 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. December 2018 $ in millions 2019 2020 2021 2022 $ 281 271 218 177 142 1.310 $2.399 2023... 2024-thereafter Total