A is corrent because in a lease with a transfer of title (capital lease) the lessor (Able) records interest revenue whereas the lessee (Baker) records depreciation expense.
B is incorrect because in a lease with a transfer of title (capital lease), the lessee (Baker) will record depreciation expense and the lessor (Able) will record interest revenue.
C is incorrect because in a lease with a transfer of title (capital lease), the lessor (Able) will record interest revenue.
D is incorrect because in a lease with a transfer of title (capital lease), the lessee (Baker) records depreciation expense and the lessor (Able) records interest revenue.
