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Abstract

The case discusses the accounting of Walgreens and CVS with regards to leases. Both companies operate thousands of stores and account for those assets mostly as lease transactions that are off-balance sheet. The case discusses the companies property, plant and equipment footnote and tries to understand the true health of the companies. The case was written to cover the accounting for leases session in the financial accounting course. It goes through the two examples of Walgreens and CVS and the companies'' financial statements and footnote disclosure with regards to leases. The case also provides an opportunity to discuss the Statement of Cash Flows impact using both a direct and indirect statement of cash flows example (CVS uses a direct statement of cash flows). The case also covers the 4 tests which the FASB (Financial Accounting Standards Board) and the IFRS (International Financial Reporting Standard) look at to judge whether a lease should be capitalised or not. The case should be assigned with the INSEAD technical note ''Accounting for Leases'' by Professors Cohen and Young.
Location:
Industry:
Size:
USD14.5 billion in assets, USD37 billion in sales
Other setting(s):
2003-2005

About

Abstract

The case discusses the accounting of Walgreens and CVS with regards to leases. Both companies operate thousands of stores and account for those assets mostly as lease transactions that are off-balance sheet. The case discusses the companies property, plant and equipment footnote and tries to understand the true health of the companies. The case was written to cover the accounting for leases session in the financial accounting course. It goes through the two examples of Walgreens and CVS and the companies'' financial statements and footnote disclosure with regards to leases. The case also provides an opportunity to discuss the Statement of Cash Flows impact using both a direct and indirect statement of cash flows example (CVS uses a direct statement of cash flows). The case also covers the 4 tests which the FASB (Financial Accounting Standards Board) and the IFRS (International Financial Reporting Standard) look at to judge whether a lease should be capitalised or not. The case should be assigned with the INSEAD technical note ''Accounting for Leases'' by Professors Cohen and Young.

Settings

Location:
Industry:
Size:
USD14.5 billion in assets, USD37 billion in sales
Other setting(s):
2003-2005

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