Universal Airlines (Universal) Needs Additional Aircraft to Expand Internationally, and It

Universal Airlines (Universal) needs additional aircraft to expand internationally, and it could borrow the needed funds and purchase the aircraft.This arrangement places additional debt on the balance sheet.Instead, Universal signs an lease agreement in which it agrees to pay the owner of the aircraft certain amounts each year for 18 years.The aircraft has an estimated service life of 18 years.Universal paints its name on the aircraft, uses the aircraft in operations, and makes the required minimum lease payments that compensates the lessor for the cost of the aircraft and provides a reasonable return for the risk involved. Which of the following is true?

A) Universal has entered into a contingent lease and does not show a liability on the balance sheet.
B) Universal recognizes lease expense on a straight-line basis during the 18 year period.
C) Universal obtains financing for its flight equipment without showing a liability on the balance sheet.
D) Universal has entered into an operating lease and recognizes a lease liability on its balance sheet.
E) Universal has entered into a capital lease and recognizes a lease liability on its balance sheet.