Which of the Following Statements Is Incorrect

Multiple Choice

Which of the following statements is incorrect?

A) The capitalisation of a leased asset increases the value of reported non-current assets and reduces the return on assets ratio.
B) Recognition of the present value of future lease payments as a liability increases reported current and non-current liabilities.This favourably affects gearing ratios.
C) The recognition of finance leases may have adverse consequences on the financial statements of a lessee entity.
D) The different accounting approaches for finance leases and operating leases provide an incentive for managers to misclassify lease arrangements as operating leases.