Phil Company Leased a Machine to Its 100%-Owned Subsidiary, Scout

question 23

Multiple Choice

Phil Company leased a machine to its 100%-owned subsidiary, Scout Company.The direct financing lease required annual lease payments in advance of $2,319 for 5 years.The present value of the minimum lease payments at 8% interest is $10,000.The adjustment of assets and liabilities needed to prepare a consolidated balance sheet is to eliminate the:

• A)​asset leased.
• B)​asset leased and the obligation under the capital lease.
• C)​obligation under the capital lease and the present value of the minimum lease payments.
• D)​obligation under the capital lease.

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Definitions:

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