How should a capital lease for a general capital asset be recorded in the governmental activities accounts at the inception of the lease?

Question

Quizplus · Accepted Answer

At the inception of a capital lease for a general capital asset, the lease should be recorded as a debit to a capital asset account and a credit to Capital Lease Obligations Payable. This reflects the acquisition of the asset and the obligation to pay for it under the terms of the lease agreement. Therefore, choices A and C are both correct and the best answer is D. A debit to a capital expense/expenditure account (choice B) would be incorrect because this type of account is used for expenses incurred in the current period, whereas a capital lease is a long-term obligation.

How Should a Capital Lease for a General Capital Asset