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

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.
-Refer to Phil Company. 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.