Karen Foust, Christine Smith, Beauregard Parent
Journal of Case Studies
November 01, 2015
A top accounting student was struggling with the concept of capital leases versus operating leases. After looking at the financial statements and notes to the financial statements of two airline companies, she realized that operating leases result in large commitments by companies that are not reported as liabilities on the balance sheet. The student decided to restate the financial information as if all lease commitments were reported as liabilities.