Question

Reported balance sheet information: Total assets = $3,959,304 Total liabilities = $1,310,153, not including the effects...

Reported balance sheet information:

Total assets = $3,959,304

Total liabilities = $1,310,153, not including the effects of operating leases

If the present value of this firm’s operating leases was $500,000 and the operating leases were treated as capital leases, the adjusted total liabilities to total assets ratio is​

A. 0.2938

B. 0.3309

C. 0.4059

D. 0.4572

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Answer #1
Solution is Option A: 0.2938
Assets          3,959,304
Lease Property capitalised              500,000
Total assets          4,459,304
Total liabilities          1,310,153
Adjusted Total liabilities to Total assets ratio                0.2938
(1,310,153/4,459,304)
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