Walmart Inc. is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and disclosure notes revealed the following information: Walmart Inc. Consolidated Balance Sheets As of January 31, 2021 2020 (Amin o) ASSETS Current Cash and cash equivalents Receivables, et Inventories Prepand expenses and other Totalcuments $ 17,741 6,516 44.949 20 861 20.067 9.465 6,284 44,435 1.622 61 806 Property and equipment, not Operating sight-of- Finance lease note Godwill Other long-term as Total 92,201 13.642 4003 28.983 23.59 105208 17424 4,417 31.073 16,567 26.495 362496 S 5 LIABILITIES AND EQUITY Current liabilities Short-term borrowings Accupayable Accrued liabilities Acredince Lien debt die within one year Operations dae with one you mange som do with 224 49,141 37.966 243 311 1466 491 575 46,973 23 20 5362 120 SI stigate Paragraph 12 Styles Property and equipment, net Operating lease right-of-use assets Finance lease right-of-use assets, net Goodwill Other long-term assets Total assets 92,201 13.642 4,005 28,983 23,598 252,496 105.208 17,424 4,417 31,073 16,567 236,495 S s 5 LIABILITIES AND EQUITY Current liabilities Short-term borrowings Accounts payable Accrued liabilities Accrued income taxe Long-term debt due within one year Operating leave obligations due within one year Finance les obligations due within one year Total current liabilities 224 49,141 37,966 242 3,115 1.466 491 92,645 575 46,973 22.296 280 5.362 1.793 511 77.790 Long-term debi Long-term operating lease obligations Long-term finance se obligations Deferred income taxes and other 41.19 12.000 3.8241 14370 43,714 16,171 4302 12,961 Commitments and contingencies Equity: Common stock Capital in ccess of par value Retained casing Accumulated other comprchenve los Total Walmart streholders guity Nocontrolling interest Tutaquity Total liabilities and equity 282 1.640 88.763 17 $0.935 6606 N7511 3539 284 3.247 83.23 (1805) 74 669 683 X1553 236495 S Se not 1. The net asset "property under finance lease obligations" has a balance of $4,005 million in 2021. The total lease liabilities are $4,338million (491 current +3,847 long-term). Why do the assets and liability amounts associated with leases differ? When capital leases are documented first, both assets and liabilities rise by minimum lease payments present value. However, amounts can differ throughout time, leasing assets are reduced through depreciation and lease liabilities are reduced by lease payments principal. 2. Prepare the 2021 summary entry to record Walmart's lease payments, assuming lease payments during the year are $950 million. Interest Expense Lease payable Cash 950 3. What is the approximate interest rate on Walmart's leases? (Hint: use interest expense calculated in requirement 2 to assist you in determining an approximately interest rate) 4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises? Walmart Inc. is the world's largest retailer. A large portion of the premises that the company occupies are leased. Its financial statements and disclosure notes revealed the following information: Walmart Inc. Consolidated Balance Sheets As of January 31, 2021 2020 (Amin o) ASSETS Current Cash and cash equivalents Receivables, et Inventories Prepand expenses and other Totalcuments $ 17,741 6,516 44.949 20 861 20.067 9.465 6,284 44,435 1.622 61 806 Property and equipment, not Operating sight-of- Finance lease note Godwill Other long-term as Total 92,201 13.642 4003 28.983 23.59 105208 17424 4,417 31.073 16,567 26.495 362496 S 5 LIABILITIES AND EQUITY Current liabilities Short-term borrowings Accupayable Accrued liabilities Acredince Lien debt die within one year Operations dae with one you mange som do with 224 49,141 37.966 243 311 1466 491 575 46,973 23 20 5362 120 SI stigate Paragraph 12 Styles Property and equipment, net Operating lease right-of-use assets Finance lease right-of-use assets, net Goodwill Other long-term assets Total assets 92,201 13.642 4,005 28,983 23,598 252,496 105.208 17,424 4,417 31,073 16,567 236,495 S s 5 LIABILITIES AND EQUITY Current liabilities Short-term borrowings Accounts payable Accrued liabilities Accrued income taxe Long-term debt due within one year Operating leave obligations due within one year Finance les obligations due within one year Total current liabilities 224 49,141 37,966 242 3,115 1.466 491 92,645 575 46,973 22.296 280 5.362 1.793 511 77.790 Long-term debi Long-term operating lease obligations Long-term finance se obligations Deferred income taxes and other 41.19 12.000 3.8241 14370 43,714 16,171 4302 12,961 Commitments and contingencies Equity: Common stock Capital in ccess of par value Retained casing Accumulated other comprchenve los Total Walmart streholders guity Nocontrolling interest Tutaquity Total liabilities and equity 282 1.640 88.763 17 $0.935 6606 N7511 3539 284 3.247 83.23 (1805) 74 669 683 X1553 236495 S Se not 1. The net asset "property under finance lease obligations" has a balance of $4,005 million in 2021. The total lease liabilities are $4,338million (491 current +3,847 long-term). Why do the assets and liability amounts associated with leases differ? When capital leases are documented first, both assets and liabilities rise by minimum lease payments present value. However, amounts can differ throughout time, leasing assets are reduced through depreciation and lease liabilities are reduced by lease payments principal. 2. Prepare the 2021 summary entry to record Walmart's lease payments, assuming lease payments during the year are $950 million. Interest Expense Lease payable Cash 950 3. What is the approximate interest rate on Walmart's leases? (Hint: use interest expense calculated in requirement 2 to assist you in determining an approximately interest rate) 4. Discuss some possible reasons why Walmart leases rather than purchases most of its premises