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adjustment 2
here non capitalized lease mean operating lease? if this is operating then Income statement has charge for monthly rentals. if this is the case then we need to add back rentals in income statement as well.
hi ken
I am trying to understand the difference. As in kaplan it is mention we should add back operating lease in profits in EVA calculation.
as per kaplan concept we will add back 16 in both year in Income statement and balance sheet.
In our example the lease is given a capital value which should become part of the capital employed.
The lease might have been running for years so it makes no sense to add it all back to this year’s profits.
If you were provided with this year’s lease charge then add that back to this year’s profits
HTH
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