Question

1. Tennessee Outfitters reported the following operating lease information in a footnote to the 2015 annual report (in thousands):
   

Fiscal Years:	Future Minimum Lease Payments
2016	$ 273,827
2017	261,828
2018	233,810
2019	206,934
2020	177,229
Thereafter	601,935
Total	$1,755,562

            REQUIRED:

Calculate the liabilities potentially left off the balance sheet. Assume that Tennessee Outfitters’ implicit discount rate is 6%. Further assume that the lease payments made after 2020 are made in 3 equal installments.

Answer 1

Fiscal Years:	Future Minimum Lease Payments	Present Value
		Calculation	PV
2016	273827	=273827/1.06 =	258327
2017	261828	=261828/1.06^2 =	233026
2018	233810	=233810/1.06^3 =	196311
2019	206934	=206934/1.06^4 =	163911
2020	177229	=177229/1.06^5 =	132436
Thereafter	601935
1st installment	200645	=200645/1.06^6 =	141447
2nd installment	200645	=200645/1.06^7 =	133440
3rd installment	200645	=200645/1.06^8 =	125887
Total	1755563		1384786
Answer: $1,384,786