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Dear Tutor,
could you please explain to me why in the answer to this question the non-capitalised leasing figure has only adjusted the capital employed and not also the NOPAT? Isn’t the whole point of capitalisation putting sth in the BS instead of into P&L.
Or maybe does the question state in any way that the leasing has not been included in the NOPAT, so no adjustment to NOPAT was necessary?
I searched the forum and although many some post to this question were made – nobody asked about the leases.Thank you in advance for your help!
A non-capitalised lease should be recognised as an asset (as though owned or a finance lease).
In NOPAT, the amount debited will have been only the operating lease rental payments, not the capital value of the finance lease. Strictly, you should add back the lease payment of the operating lease to the NOPAT figure (less tax relief). If this figure isn’t given you can’t make that adjustment.
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