Capital Leases Future Minimum Payments Present …€¦ · 1 Capital Leases Future Minimum Payments...

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Capital Leases Future Minimum Payments Present Value of Net

Minimum Payments

CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPaymentsRollUp

This is a common disclosure within SEC financial filings. This analysis looks at typical approaches for

disclosing this information and also how this information is represented when expressed in the XBRL

reporting format.

Typically, a financial report will have a balance sheet which contains current and noncurrent line items

for capital lease obligations. For example:

In addition, one would expect that an SEC XBRL financial filing will have a text block and a detailed

disclosure of the present value of future minimum payments under capital lease obligations which ties

to the balance sheet:

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The following is a summary of these disclosures which were found within SEC XBRL financial filings:

What follows is more detailed information about typical SEC XBRL financial filings which contained this

disclosure.

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https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000785787/filings/0001193125-13-

019043/components/4724223/rendering/

Total minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1

Less: amounts representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Present value of minimum lease payments: us-

gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments

Less: current portion of obligations under capital leases: us-gaap:CapitalLeaseObligationsCurrent

Long-term portion of obligation under capital leases: us-gaap:CapitalLeaseObligationsNoncurrent

This representes the HTML and Text block disclosure. If this disclosure exists, a text block should

likewise exist: us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock

https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000785787/filings/0001193125-13-019043/components/4724223/rendering/


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Commentary: This is the most common approach taken for this disclosure. The only piece missing form

this is if a filer reports executory costs. Only a handful of public companies report executory costs. See

examples later in this analysis which show executory costs.



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Future minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Less amounts representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Capital leases total: us-gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments

No current/noncurrent breakdown is provided. Not required for unclassified balance sheets.

Commentary: This follows a similar pattern to the first, however it uses the concept us-

gaap:CapitalLeasesFutureMinimumPaymentsDue rather than the concept us-

gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1

The following is the documentation for those two concepts which is then followed by a screen shot of

the US GAAP XBRL Taxonomy which shows these two concepts within the taxonomy hierarchy :

Label Name Documentation

Capital Leases, Future

Minimum Payments Due (1

below)

us-gaap:CapitalLeasesFutureMinimumPaymentsDue Amount of minimum lease

payments for capital leases

Capital Leases, Future

Minimum Payments, Net

Minimum Payments (2

below)

us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1 Amount of minimum lease

payments for capital leases net of

executory costs, which include

amounts paid by the lessee to the

lessor for insurance, maintenance

and taxes.



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http://xbrlview.fasb.org/yeti/resources/yeti-

gwt/Yeti.jsp#tax~(id~156*v~3378)!con~(id~3353412)!net~(a~3063*l~749)!lang~(code~en-

us)!path~(g~89168*p~0_3_0_0_5_0_0_2)!rg~(rg~32*p~12)

Essentially, #1 is a subtotal before executory costs and #2 is a subtotal before interest included in

payments. The question is: Which concept should be used if executory costs are not reported? As long

at the two concepts are not reversed, automated processes can figure this out fairly easily.

NOTE: This is a common situation throughout the US GAAP XBRL Taxonomy. The approach taken within

the taxonomy and within related taxonomy documentation is inconsistent.

http://xbrlview.fasb.org/yeti/resources/yeti-gwt/Yeti.jsp#tax~(id~156*v~3378)!con~(id~3353412)!net~(a~3063*l~749)!lang~(code~en-us)!path~(g~89168*p~0_3_0_0_5_0_0_2)!rg~(rg~32*p~12)



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Total minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsDue


Present value of minimum capital lease payments: us-


Less current installments: us-gaap:CapitalLeaseObligationsCurrent

Noncurrent obligations under capital leases: us-gaap:CapitalLeaseObligationsNoncurrent

Commentary: Current and noncurrent are explicitly provided on the balance sheet. (That is why the

rendering engine makes a mistake and shows the extra columns in the first rendering.)



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Total: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Interest portion: NOT REPORTED.

Present value of minimum capital lease payments: NOT REPORTED.

Commentary: Why is there no amount representing interest and a present value and amount of

interest?



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Total future capital lease payments including interest: NOT PROVIDED.

Less: interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Net minimum capital lease payments: us-


Lesss: current portion: us-gaap:CapitalLeaseObligationsCurrent

Non-current portion: us-gaap:CapitalLeaseObligationsNoncurrent

Commentary: This disclosure does not show a total for the minimum lease payments (before the

interest) but everything else is the same and does show a current/noncurrent breakdown. This is exactly

the same as the HTML version of this disclosure and the text block disclosure shown here:



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Interest portion: NOT SHOWN

Present value of minimum capital lease payments: us-


Current portion: NOT SHOWN

Noncurrent portion: NOT SHOWN

Commentary: Why is the interest potion not shown? This is an insurance company which does not

have a classified balance sheet, so they don’t break down the current/noncurrent portion.



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Total minimum lease payments is: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Less amount representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Capital lease obligations: us-gaap:CapitalLeaseObligations

Commentary: This is consistent with the majority of other filers in most respects, however “us-

gaap:CapitalLeaseObligations” is used as the total and the current/noncurrent breakdown is not shown

within this report component. However, the current/noncurrent breakdown is shown in a separate

report component which contains that disclosure.



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Capital lease obligations including interest: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Less: Amounts representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Capital lease obligation: us-gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments

Does not show current/noncurrent breakdown.

Commentary: For some reason the 2014 to 2017 facts are represented in a funky place.



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Operating and capital together under the same [Line Items] which is less than optimal, but the reported

facts are fine.

Total lease obligations, capital leases: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Less amount representing interest, capital leases: us-

gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Present value of minimum capital lease obligations, capital lease: us-


Commentary: No current/noncurrent breakdown. The filer provides a classified balance sheet and the

current/noncurrent breakdown is NOT on the balance sheet. However, current/noncurrent capital lease

obligations where broken down as part of a long term debt breakdown, but it does not tie to the above

schedule. So basically, the current/noncurrent breakdown is NOT provided explicitly.



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Less interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments (which is

shown, even though it is ZERO which is good, but the filer used NIL which is less than optimal, but it

really does not mess anything up.)

Total principal obligations: us-gaap:CapitalLeaseObligations

Less: current portion: us-gaap:CapitalLeaseObligationsCurrent

Long-term capital lease: us-gaap:CapitalLeaseObligationsNoncurrent

Commentary: The use of NIL is rare in financial reports. An appropriate use is, say, “Commitments and

contingencies” on the balance sheet where there is no number, but there is a disclosure related to

commitments and contingencies. In that case, ZERO is not really appropriate, reporting no value is not

appropriate and having no line items is not appropriate



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Gross capital lease obligations: us-gaap:CapitalLeaseObligations, seems like that should be us-

gaap:CapitalLeasesFutureMinimumPaymentsDue and that this is a different usage than most of the

other filers.

Less imputed interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Present value of net minimum lease payments: us-


Less current portion of capital lease obligation: us-gaap:CapitalLeaseObligationsCurrent

Total long-term capital lease obligations: us-gaap:CapitalLeaseObligationsNoncurrent

Commentary: This is a very odd disclosure and hard to tie things together. The “Gross capital lease

obligations” concept seems odd. Why would the breakdown by year not be shown? Trying to tie all the

debt together is a nightmare in this Amazon filing. Why?



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This is a text block, us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock,

does not include the imputed interest amounts or the net present value.

Commentary: Why would imputed interest not be shown? If imputed interest is zero, it might be better

to explicit make that statement by providing the line item and a value of zero. See other examples which

take this approach.



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Capital leases, future minimum payments due: us-gaap:CapitalLeasesFutureMinimumPaymentsDue

Less Amount representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments

Present value of net minimum future capital lease payments: us-


Less Principal portion of current installments: us-gaap:CapitalLeaseObligationsCurrent

Long-term portion of obligations under capital leases: us-gaap:CapitalLeaseObligationsNoncurrent

(Below is the text block for exactly the same disclosure, but they use different terminology)

Commentary: This is typical.



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Future minimum lease payment under capital lease – Total: us-gaap:CapitalLeasesFutureMinimumPaymentsDue




Commentary: Typical.



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gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments

This is the text block for the same disclosure, labels are exactly the same:



Text block: us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock





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Present value of capital lease obligations: us-


Text block/HTML of the above detail of above:







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This disclosure is unnecessarily complicated to read because the filer combined some other information

that does not relate to future payments under capital leases with that disclosure. This capital lease

disclosure has no “range”. The information is readable by both humans and computers, but having the

range characteristic would cause someone to need to manually look at what is going on here.

Total minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1




Less current installments of obligations under capital leases: us-gaap:CapitalLeaseObligationsCurrent

Obligations under capital leases: us-gaap:CapitalLeaseObligationsNoncurrent



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By representing operating leases and capital leases together, something that related to the operating

leases makes the capital lease information just a little harder to read.

Future minimum lease payments under capital leases – Total: us-gaap:CapitalLeasesFutureMinimumPaymentsDue






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Total minimum rentals: us-gaap:CapitalLeasesFutureMinimumPaymentsDue


Capital Lease Obligations, Total: us-gaap:CapitalLeaseObligations



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000004/components/4860910


Less: executory costs: us-gaap:CapitalLeasesFutureMinimumPaymentsExecutoryCosts

Net minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1

Less: amounts representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments



Commentary: This is different than the others shown so far in that it has executory costs and a subtotal

after executory costs and before interest. Only a handful of filers report that they have executory costs.

https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000318996/filings/0000318996-13-000004/components/4860910

https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000318996/filings/0000318996-13-000004/components/4860910

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Less: Amount representing taxes, included in total minimum lease payments: us-

gaap:CapitalLeasesFutureMinimumPaymentsExecutoryCosts

Net minimum lease payments: us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1

Less: Amount representing interest: us-gaap:CapitalLeasesFutureMinimumPaymentsInterestIncludedInPayments



Commentary: Likewise, this disclosure has executory costs and a subtotal before imputed interest. This

disclosure ties to the total per the balance sheet, but a different number ties than all of the other

disclosures. See that the balance sheet does not show the present value of lease payments but rather

the total minimum lease payments; the gross amount rather than the net like pretty much all of the



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others.

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Conclusions:

This representation tends to be one of the more common approaches to providing this disclosure.



However, that disclosure does not have a line item for executory costs and for a subtotal which would

exist between executory costs and imputed interest. (See the examples which show executory costs.)

The following is a summary of observations:

The concept us-gaap:CapitalLeasesFutureMinimumPaymentsDue is the correct concept to

represent “Total minimum lease payments”. When executory costs are not reported, some

filers use the concept us-gaap:CapitalLeasesFutureMinimumPaymentsNetMinimumPayments1

to represent this total. This appears less than optimal, but the financial report can be

interpreted. A bigger error would be for filings to reverse the those two totals.

The concept us-gaap:CapitalLeaseObligations is used interchangeably with the concept us-

gaap:CapitalLeasesFutureMinimumPaymentsPresentValueOfNetMinimumPayments to

express exactly the same line item which is the present value of minimum lease payments as

shown above. This appears to be a duplicate concept in the US GAAP XBRL Taxonomy. Those

consuming information should be aware of this and this duplicate concept can be easily worked

around.

Sometimes there is and sometimes there is not a current and noncurrent breakdown. If a

balance sheet is not classified, this breakdown is not required. Sometimes the breakdown of

current/noncurrent is represented in a different report component, so it does exist somewhere.

Other times the breakdown is on the balance sheet.



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The concept which reconciles to the balance sheet is the present value of lease payments (net

amount) and not the total minimum payments (gross amount). This mistake was made by one

filer analyzed.

It the detailed disclosure is provided, then the text block disclosure will also most certainly be

provided: us-gaap:ScheduleOfFutureMinimumLeasePaymentsForCapitalLeasesTableTextBlock.

Two other text blocks commonly contain this disclosure: us-

gaap:LeasesOfLesseeDisclosureTextBlock and us-

gaap:DebtAndCapitalLeasesDisclosuresTextBlock; however, those two text blocks are not as

specific as the first text block.





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Bad choices:



Commentary: This mixing of capital and operating is unnecessary. Simply separate them into distinct

report components or even different hierarchies in the same report component and they would be

easier to read and understand.



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Commentary: Provides no subtotal between the taxes (executory costs) and imputed interest. A

handful of filers chose this approach.



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075713/components/4862895/rendering

Commentary: This filer combines the interest and executory costs as one line item and uses the

executory costs concept us-gaap:CapitalLeasesFutureMinimumPaymentsExecutoryCosts. That is better

then creating an extension.

https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000732712/filings/0001193125-13-075713/components/4862895/rendering

https://eri.xbrlcloud.com/edgar-report-information/rest/entities/0000732712/filings/0001193125-13-075713/components/4862895/rendering

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