Using the Information Below Answer the Following Questions

question 4

Multiple Choice

Using the information below answer the following questions:
The operating lease is a 3-year lease commencing on 1 January 2012 with payments of $20 000 on 31 December in each of the 3 years. Assume the lease had been treated as a capital lease instead of an operating lease (using a 12% discount rate the present value of the lease payments is $48036; the company uses straight line depreciation for its capital leases) .
-If the company had recorded the lease as a capital lease instead of an operating lease:

• A) total assets and total liabilities would be higher than under an operating lease
• B) total assets but not total liabilities would be higher than under an operating lease
• C) total liabilities but not total assets would be higher than under an operating lease
• D) total assets and total liabilities would be lower than under an operating lease.