Reed Machinery just signed a capital lease agreement with a present value of $260,000.How would this lease first appear on Reed Machinery's balance sheet?
A) Capital leases do not appear on the balance sheet.
B) Assets under capital lease $260,000; Obligations under capital lease $260,000
C) Assets under capital lease $130,000; Obligations under capital lease $130,000
D) Assets under capital lease $260,000; Retained earnings committed to leases $260,000
E) Assets under capital lease $130,000; Retained earnings committed to leases $130,000
Correct Answer:
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