Phil Company Leased a Machine to Its 100%-Owned Subsidiary, Scout

Multiple Choice

Phil Company leased a machine to its 100%-owned subsidiary, Scout Company.The direct financing lease required annual lease payments in advance of $2,319 for 5 years.The present value of the minimum lease payments at 8% interest is $10,000.The adjustment needed to arrive at consolidated net income for the first year after the lease is ____.

A) ​$0
B) ​$800
C) ​$2,319
D) ​$10,000