How Should a Fixed Asset Acquired Through a Capital Lease

question 28

Multiple Choice

How should a fixed asset acquired through a capital lease agreement be recorded in a General Fund?

• A)at the present value of the future lease payments,by debiting expenditures and crediting other financing sources - capital leases
• B)at the total amount of the future lease payments,by debiting expenditures and crediting other financing sources - capital leases
• C)at the present value of the future lease payments,by debiting expenditures and crediting capital leases payable.
• D)no entry is needed until payments are actually made on the capital lease agreement.

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Definitions:

Dimethylheptanoic Acid

denotes a hypothetical organic compound, potentially misnamed, suggesting a heptanoic acid derivative substituted with two methyl groups.

γ-hydroxypentanoic Acid

An organic compound characterized by a five-carbon chain with a hydroxyl group attached to the third carbon and a carboxylic acid group at the end.

γ-hydroxy-γ-methylbutyric Acid

An organic compound, structurally related to β-hydroxy-β-methylbutyrate (HMB), and is involved in the biosynthesis and metabolism of fatty acids.

δ-hydroxyvaleric Acid

An organic compound that is structurally a hydroxylated form of valeric (pentanoic) acid, where the hydroxyl group is on the δ-carbon.