CE Corporation (ACE), a publically traded NASDAQ company (symbol ACE), is a manufacturer of electrical automobiles. It is based in Costa Rica and the company has been operating since 2006. The company sells their electrical automobiles to auto manufacturers as well as the retail market on a worldwide basis. Its major clients are Ford, General Motors and Toyota. ACE has captured about 10 percent of the world market of the electrical automobile sales. Its stock sells at 25 US Dollars per share, and its 52-week price range is between 20.25 and 28.55 US Dollars, with a market cap of 11.8 billion dollars. Their financial statements presented below for the year ending December 31, 2019 has been prepared using current US GAAP and IFRS standards. The controller would like to see the effect of the treatment of the new lease standards on the financial statements; you have been assigned this task. In particular, the controller would like to see the impact the differences have on i alance sheet, income statement, cash flow statement and selected relevant financial ratios. The controller is especially concerned on the effects the new lease standard will have on the company's covenant agreements. Table 1: Balance Sheet for ACE Corp. at 12/31/2019 and 12/31/2018 $ 19,000 17,000 21.000 57,000 ACE CORPORATION Balance Sheet (in 000 Except Par Value) As of December 31, 2010 and 2018 ASSETS 2019 Current Assets Cash $ 33,000 Accounts Receivable (net) 25,000 Inventory (FIFO) 50.000 Total Current Assets 108,000 Noncurrent Assets Security Available for Sale $ 10,000 Property, Plant and Equipment 100,000 less Accumulated Depreciation (30,000) 80,000 Intangible Assets Trademark Goodwill 7.000 Total Noncurrent Assets 12.000 Total Assets S200,000 $136,000 (28.000) 108,000 5,000 7,000 7.000 14,000 $179.000 LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES Current liabilities Accounts payable Accrued interest Accrued operating expenses Income taxes payable Total current liabilities Noncurrent Liabilities Deferred income taxes Bonds Payable Total noncurrent liabilities Total Liabilities $ 18,000 2,000 13,000 7,000 40,000 $ 17,000 2,000 19,000 6.000 44,000 $ 5,000 45.000 $ 4,000 45.000 50,000 90.000 49.000 93,000 SHAREHOLDERS' EQUITY Common stock ($1 par) Additional paid in capital Retained earnings Total Shareholders' Equity Total Liabilities and Shareholders' Equity 20,000 30,000 60.000 18,000 17,000 51.000 110.000 $200.000 86.000 $179.000 Table 2: ACE Corp. Income Statement for the Year Ended December 31, 2019 ACE Corporation Income Statement (in 000, Except Per Share Data) For the Year Ended December 31, 2019 Sales Cost of goods sold Gross profit Selling and administrative expenses $ 31,000 Amortization and depreciation expense 10,000 Interest expense 4.000 Income before taxes Income tax expense $281,000 (175.000) 106,000 (45.000) 61,000 20.000