The amount to be recorded as the cost of an asset under capital lease is equal to the
A) present value of the minimum lease payments.
B) present value of the minimum lease payments or the fair value of the asset, whichever is lower.
C) present value of the minimum lease payments plus the present value of any unguaranteed residual value.
D) carrying value of the asset on the lessor's books.

Question

Quizplus · Accepted Answer

The cost of an asset under a capital lease is recorded at the lower of the present value of the minimum lease payments or the fair value of the asset, in accordance with accounting standards.

The Amount to Be Recorded as the Cost of an Asset