Capital Leases Would Show Up on the Balance Sheet of the Firm

question 14

Multiple Choice

Capital leases would show up on the balance sheet of the firm in which manner for a six year machinery lease worth $700,000:

• A) capital leases do not have to be put on the balance sheet only financial leases do.
• B) Asset-Machinery $700,000; Liabilities-Long Term debt $700,000 because of debt displacement.
• C) Asset-Assets under Capital Lease $700,000; Liabilities-Obligations under Capital Lease $700,000.
• D) Assets-Assets under Capital Lease $700,000; Liabilities-Long Term Debt $700,000 because of debt displacement.

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Definitions:

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