What happens with net income when I capitalize operating leases?
What happens with net income when I capitalize operating leases? What adjustment do I have to make with EBTIDA?
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Nothing happens to net income. Lease/ rent expense just becomes interest expense & depreciation expense. As for EBITDA, if the lease was considered an operating expense (it should be) then capitalizing it would increase EBITDA since that interest & depreciation expense moves below the EBITDA line. You could've just googled this.
So I add back the initial operating expense on EBITDA, do I have to subtract the newly created DA?
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