D is corrent. Per ASC Topic 840, the present value of the minimum lease payments should be used to determine the liability under a capital lease. Under an operating lease, a liability arises when rent expense is recorded but has not been paid. Furthermore, it is recorded at the actual amount of cash to be paid, not its present value.
A is incorrect. Per ASC Topic 840, the present value of the minimum lease payments should be used to determine the liability under a capital lease. Under an operating lease, a liability arises when rent expense is recorded but has not been paid. Furthermore, it is recorded at the actual amount of cash to be paid, not its present value.
B is incorrect. Per ASC Topic 840, the present value of the minimum lease payments should be used to determine the liability under a capital lease. Under an operating lease, a liability arises when rent expense is recorded but has not been paid. Furthermore, it is recorded at the actual amount of cash to be paid, not its present value.
C is incorrect. Per ASC Topic 840, the present value of the minimum lease payments should be used to determine the liability under a capital lease. Under an operating lease, a liability arises when rent expense is recorded but has not been paid. Furthermore, it is recorded at the actual amount of cash to be paid, not its present value.
