Accounting for Leases at Walgreens Co. and CVS Corporation

Published 16 Aug 2007
Reference 5462
Region North America
Summary

The case discuss the accounting of Walgreens and CVS with regards to leases. Both companies operate thousands of stores and account for those assets mostly as lease transactions that are off-balance sheet. The case discuss the companies property, plant and equipment footnote and tries to understand the true health of the companies.

Teaching objectives

The case was written to cover the accounting for leases session in the financial accounting course. It goes through the two examples of Walgreens and CVS and the companies financial statements and footnote disclosure with regards to leases. The case also provides an opportunity to discuss the Statement of Cash Flows impact using both a direct and indirect statement of cash flows example. (CVS uses a direct statement of cash flows). The case also covers the 4 tests which FASB and IFRS look at to judge whether a lease should be capitalized or not. The case should be assigned with the INSEAD technical note - Accounting for Leases by Professor Cohen and Young.

Keywords
  • RD0707
  • AR2007
  • AR0607