Jockey City Operates FUNaquatic Park That Meets the GASB Definition

Multiple Choice

Jockey City operates FUNaquatic Park that meets the GASB definition of an Enterprise Fund (EF) . In 2018, the EF enters into a 20-year agreement with Coco's Cabanas to lease shower facilities and changing rooms for the park. If the City were to buy the equipment, it would cost $320,000. Assuming that the present value of the lease payments is $281,526, how should the EF initially report the lease?

A) As a debit to Capital asset-cabanas and shower facilities for $281,526 and a credit to Lease notes payable for the same amount
B) As a debit to Intangible asset-lease for $281,526 and a credit to Lease payable for the same amount
C) The leased asset and present value of the lease payments should be reported in Jockey City's General Fund
D) As a debit to Capital assets-cabanas and shower facilities for $320,000 and a credit for $281,526 to Lease payable and a credit for $38,474 to Deferred interest expense-leases