A capital lease should be recorded in the lessee's accounts at the inception of the lease in an amount equal to
A)the present value of the minimum lease payments less the executory costs included in the minimum lease payments
B)the total value of the future rental payments less any estimated contingent payments
C)the total value of future rental payments less any executory payments included in the future payments
D)the total value of the minimum lease payments less executory costs, if any

Question

Quizplus · Accepted Answer

A capital lease is recorded as an asset in the lessee's accounts at the inception of the lease in an amount equal to the present value of the minimum lease payments, excluding any executory costs included in the minimum lease payments. This is because the lessee effectively becomes the owner of the asset for the duration of the lease, and the minimum lease payments represent the cost of acquiring and financing the asset.

A Capital Lease Should Be Recorded in the Lessee's Accounts