Company name CIK (CENTRAL INDEX KEY) The weblink of the 10-K report of fiscal year 2009 The

weblink of the 10-K report of fiscal year 2010 2009 Name of Chief Executive Officer Auditor 2010

Notes:

1. Assume the lease payments are paid at the beginning of the year.

2. For the incremental borrowing rate, choose a fixed interest rate of the company and round to the nearest percentage (for instance, round 6.

year of 2009 amount (current year) 2009 2010 2011 2012 2013 2014 2015 2016 2017 total present value

incremental borrowing rate

PV factor present value

Assume the lease payments are paid at the beginning of the year.

year of 2010 amount (current year) 2010 2011 2012 2013 2014 2015 2016 2017 2018 total present value

incremental borrowing rate

PV factor present value

percentage (for instance, round 6.84% to 7%).

from income statement

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assume 1/3 of the amount of thereafter assume 1/3 of the amount of thereafter assume 1/3 of the amount of thereafter

from income statement

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assume 1/3 of the amount of thereafter assume 1/3 of the amount of thereafter assume 1/3 of the amount of thereafter

Notes: 1. These t-accounts are only for the incremental lease assets and liabilities if the future operating lease commitments are cap 2. Assume the lease payments are paid at the beginning of the year. 3. Amortization of the lease assets is based on straight-line method over eight years, with no residual value. 4. The amortization of lease assets will directly reduce the balance of capitalized lease assets 5. No longer there is rent expense, but you can put its existing balance (without capitalization) and compare it with the comb

2009

Capitalized Lease assets

Capitalized Lease payable

Cash

2010

Capitalized Lease assets

Capitalized Lease payable

Cash

ating lease commitments are capitalized.

o residual value.

n) and compare it with the combined balance of interest expense and amortization expense (with capitalization).

Interest expense

Rent expense

Amortization expense

Interest expense

Rent expense

Amortization expense

Incremental lease assets from capitalization (from previous calculation) Incremental lease liabilities from capitalization (from previous calculation) Impact on the Balance Sheet

Total assets Total liabilities Shareholder's equity

Debt to equity ratio

Impact on the Income Statement Pre-tax accounting income without capitalization Current year's rent expense Interest expense for the incremental lease liability Amortization of the lease assets (straight-line over eight years) Pre-tax accounting income with capitalization Pre-tax accounting income Pre-tax income on Assets Pre-tax income on Shareholder's Equity Impact on the Cash Flow Statement Cash flow from Operating activities without capitalization Rent payment (add back) cash flow from interest payment with capitalization Cash flow from Investing activities without capitalization The reduction of lease payable Cash flow from investing acitivities with capitalization

+ -

+ -

Cash flow from operating activities Cash flow from investing activities

Without capitalization

With capitalization

see page 839 and 840 for statement of cash flow impact

follow 2009