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 of assets and liabilities needed to prepare a consolidated balance sheet is to eliminate the:

A) ​asset leased.
B) ​asset leased and the obligation under the capital lease.
C) ​obligation under the capital lease and the present value of the minimum lease payments.
D) ​obligation under the capital lease.