E10-30. Analyzing, Interpreting, and Capitalizing Operating Leases TJX Companies Inc. reports the following balance sheet in its 2019 first-quarter report (10-0). May 4, 2019 February 2, 2019 $ 2,235,056 393,276 5,057,202 381,678 8,067,212 5,018,598 5.801 8,810,367 96,685 490,401 $22,489,064 $ 3,030,229 346,298 4,579,033 513,662 8,469,222 5,255,208 6,467 97,552 497,580 $14,326,029 S thousands Assets Current assets Cash and cash equivalents Accounts receivable, net Merchandise inventories Prepaid expenses and other current assets Total current assets Net property at cost .. Noncurrent deferred income taxes, net Operating lease right-of-use assets. Goodwill.... Other assets Total Assets Liabilities Current liabilities Accounts payable. Accrued expenses and other current liabilities Current portion of operating lease liabilities. Federal, state and foreign income taxes payable Total current liabilities. Other long-term liabilities .. Noncurrent deferred income taxes, net Long-term operating lease liabilities.. Long-term debt.. Shareholders' Equity Preferred stock, authorized 5,000,000 shares, par value $1, no shares issued....... Common stock, authorized 1,800,000,000 shares, par value $1, issued and outstanding 1,212,667,546; 1,217,182,508 and 1,250,405,376 respectively.. Additional paid-in capital... Accumulated other comprehensive loss. Retained earnings ... Total shareholders' equity... Total Liabilities and Shareholders' Equity $ 2,644,143 2,733,076 $ 2,578,370 2,468,588 1,343,243 190,818 6,581,019 752,968 167,283 7,621,531 2,234,368 154,155 5,531,374 1,354,242 158,191 2,233,616 1,212,668 1,217,183 (633,282) 4,552,509 5,131,895 $22,489,064 (630,321) 4,461,744 5,048,606 $14,326,029 TJX reported the following in its 10-K report for the year ended February 2, 2019. The following is a schedule of future minimum lease payments for continuing operations as of February 2, 2019: In thousands Fiscal year 2020.... 2021. 2022 2023 2024 Later years Total future minimum lease payments Operating Leases $1,676,700 1,603,378 1,441,444 1,253,420 1,042,184 2,774,845 $9.791,971 a. The company adopted the new lease standard using the modified retrospective method which does not require restatement of comparative numbers on the balance sheet. What analysis challenge does this present ifwe want to analyze TJX at May 4, 2019? b. Assume a discount rate of 3.75% to determine the present value of the operating lease payments at fiscal-year-end February 2, 2019. Use Excel and do not round any of your numbers or subtotals. c. What adjustments might we make to the fiscal-year-end numbers to increase comparability of the TJX balance sheet numbers? d. Did the new lease standard have a material effect on the TJX balance sheet? Explain
