For government-wide financial statements, what account is credited when a piece of equipment is leased on a capital lease?
A) Equipment-Capital Lease
B) Encumbrances-Long Term
C) Encumbrances-Lease Obligations
D) Capital Lease Obligation
E) The lease is not recorded.

Question

Quizplus · Accepted Answer

When a piece of equipment is leased on a capital lease, the government records a liability called Capital Lease Obligation, which represents the present value of the lease payments. This liability is credited in the financial statements.

For Government-Wide Financial Statements, What Account Is Credited When a Piece