GM Forms a Separate Legal Entity, Funded Mostly by Debt

GM forms a separate legal entity, funded mostly by debt. The entity acquires a building and leases it to GM. GM guarantees the residual value of the building. If GM does not consolidate the entity, how does this reporting choice affect GM's financial statements, as compared with consolidating the entity?

A) GM's interest expense is overstated.
B) GM's debt is overstated.
C) GM's assets are understated.
D) GM's capital stock is understated.