Walmart Stores, 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: Balance Sheet ($ in millions) 2011 2010 Assets Property: ?Property under capital lease $5,509 $5,669 ?Less: Accumulated amortization (2,780) (2,906) Liabilities Current liabilities: ?Obligations under capital leases due within one year 336 346 Long-term debt: ?Long-term obligations under capital leases 3,150 3,170 Required: 1. Discuss some possible reasons why Walmart leases rather than purchases most of its premises. 2. The net asset ?property under capital lease? has a 2011 balance of $2,729 million ($5,509 ? 2,780). Liabilities for capital leases total $3,486 ($336 + 3,150). Why do the asset and liability amounts differ? 3. Prepare a 2011 summary entry to record Walmart?s lease payments, which were $600 million. 4. What is the approximate average interest rate on Walmart?s capital leases? (Hint: See Req. 3)

Walmart Stores, 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: Balance Sheet ($ in millions) 2011 Assets Property: Property under capital lease Less: Accumulated amortization Liabilities Current liabilities: Obligations under capital leases due within one year Long-term debt: Long-term obligations under capital leases $5,509 (2,780) 2010 $5,669 (2,906) 336 346 3,150 3,170 Required: 1. Discuss some possible reasons why Walmart leases rather than purchases most of its premises. 2. The net asset \"property under capital lease\" has a 2011 balance of $2,729 million ($5,509 2,780). Liabilities for capital leases total $3,486 ($336 + 3,150). Why do the asset and liability amounts differ? 3. Prepare a 2011 summary entry to record Walmart's lease payments, which were $600 million. 4. What is the approximate average interest rate on Walmart's capital leases? (Hint: See Req. 3)