Note 15. LeasesCapital Leases: The HHS has entered into various capital leases with Native American and Alaskan Native tribes and with the General Services Administration (GSA) for office and warehouse space. Lease terms vary from 1 to 20 years. Capitalized assets acquired under capital lease agreements and the related liabilities are reported at the present value of the minimum lease payments. Assets under Capital Lease amounts are reported in Note 8, General Property, Plant and Equipment. Operating Leases: The HHS has commitments under various operating leases with private entities and GSA for offices, laboratory space, and land. Leases with private entities have initial or remaining noncancelable lease terms from 1 to 20 years. The GSA leases in general are cancelable with 120 days notice. Under an operating lease, the cost of the lease is expensed as incurred. A Summary of Net Assets under Capital Lease and Future Minimum Lease Payments at September 30, 2007 and 2006, is presented in the schedules that follow: (In Millions) | 2007 | 2006 | Summary of Net Assets Under Capital Lease | | | Land and Building | $ 139 | $ 140 | Machinery and Equipment | 1 | 1 | Subtotal
| $ 140 | $ 141 | Accumulated Amortization | (42) | (38) | Assets Under Capital Lease | $ 98 | $ 103 |
| | 2007 | | 2006 | (In Millions) Future Minimum Lease Payments | | | | | | Capital Leases | | Operating Lease | | Capital Leases | | Operating Lease | Year 1 | | $ 13 | | $ 341 | | $ 12 | | $ 319 | Year 2 | | 13 | | 349 | | 12 | | 333 | Year 3 | | 13 | | 325 | | 13 | | 333 | Year 4 | | 11 | | 313 | | 13 | | 285 | Year 5 | | 11 | | 290 | | 11 | | 253 | Later Years | | 127 | | 1,069 | | 137 | | 859 | Total Minimum Lease Payments | | $ 188 | | $ 2,687 | | $ 198 | | $ 2,382 | Imputed Interest | | (76) | | | | (79) | | | Total Capital Lease Liability | | $ 112 | | | | $ 119 | | |
Report Date: November 15, 2007
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