At year end, a company with significant off-Balance Sheet operating leases has total assets of $90,000,000, and total equity of $36,000,000. The notes to the financial statements disclose the following long-term lease obligations.
Complete the adjustment to capitalize these operating leases and compute their debt ratio before and after the adjustment.
Year Future Lease Obligation
20X1 3,000,000
20X2 3,000,000
20X3 2,000,000
20X4 2,000,000
20X5 1,000,000
20X6 and after 10,000,000