Reyes Corp. disclosed the following lease information in its 2016 annual report related to its leasing activities (in millions).

	Capital Leases	Operating Leases
2017	$ 307	$ 2,471
2018	286	2,302
2019	262	1,202
2020	251	980
2021	116	830
Thereafter	703	9,130
Total	1,925	$16,915
Amount representing interest	(754)
Present value of net minimum lease payments	$ 1,171

1. What effect does the failure to capitalize operating leases have on Reyes Corp.s balance sheet? Over the life of the lease, what effect does this classification have on net income?
2. Calculate the lease-related liabilities that are potentially missing from Reyess 2016 balance sheet. Assume a discount rate of 12% and round the remaining lease life to the nearest whole year.