Santa Corporation
NOTE: These Multiple Choice Questions Require Present

question 58

Multiple Choice

Santa Corporation
NOTE: These multiple choice questions require present value information.
Santa Corporation manufactures Christmas decorations and supplies throughout the world. The company owns property, plant, and equipment and also enters into operating leases for certain facilities. Assume that Santa's incremental borrowing rate is 8%. The company's tax rate is 40%. Listed below is selected financial data for Santa and a portion of the company's operating lease footnote.
$\begin{array}{llll}&\underline{2012}&\underline{2011}&\underline{2010}\\\text { Property, Plant, \& Equipment (net) } &\$882,468&\$717,453&\$658,214 \\\text { Total Assets } &1,756,854 & \$ 1,405,484 & 1,254,896 \\\text { Common Shareholders'Equity } & 867,992&652,626&587,951 \\ & \\\text { Sales } & \$ 2,922,915 & \$ 2,415,632 \\\text { Cost of GoodsSold } & 2,016,811 & 1,642,630 \\\text { Depreciation Expense } & 78,584 & 67,542 \\\text { Interest Expense } & 106,663 & 90,343 \\\text { Net Income } & 248,448 & 217,407\end{array}$
$\begin{array}{|l|l|}\hline & \text { Sant Corp. } \\\hline & \text { Operating Lease Disclosure } \\\hline & \text { (amounts in thousands) } \\\hline & \\\hline & \text { Operating Lease Commitments } \\\hline & \text { at the end of } 2012 \\\hline & \\\hline & \\\hline \text { Year} & \text { Reported Lease Commitments } \\\hline 2013& \$ 148,239 \\\hline 2014 & \$ 252,800 \\\hline2015 & \$ 278,327 \\\hline 2016 & \$ 279,210 \\\hline 2017& \$ 285,452 \\\hline\text { Beyond } 2017 & \$ 2,471,600 \\\hline \end{array}$
-
Using the information provided by Santa Corporation estimate the average life of the operating leases.

• A) 8.66 years
• B) 13.66 years
• C) 10 years
• D) Not able to determine

---

Definitions:

Culturally Contingent

Describes beliefs, practices, or attitudes that are dependent on specific cultural contexts or norms, indicating that they can vary greatly across different cultures.

Individualism

The belief that the values and goals of the individual are primary.

Trustworthiness

The quality of being reliable and deserving of trust, important in establishing credibility and dependable relationships.

Leadership Advice

Guidance for leaders and managers on how to effectively lead teams and organizations, encompassing strategies for motivation, conflict resolution, and decision-making.