Financial Accounting Standards Board (FASB) Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting which of the following?

Question

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FASB Statement #13 requires that for an unqualified audit report, financial (or capital) leases must be included in the balance sheet by reporting the present value of future lease payments as an asset and also showing this same amount as an offsetting liability. This is because the lessee has a right to use the leased asset, which represents an economic resource, and therefore, must be recognized as an asset. At the same time, the lessee has an obligation to make lease payments, which creates a liability. The present value of future lease payments is used because it represents the current worth of the stream of future lease payments, discounted at the appropriate interest rate.

Financial Accounting Standards Board (FASB) Statement #13 Requires That for an Unqualified