"A capital (or finance) lease results in both an asset and a liability on a company's balance sheet." Explain A. A capital (or finance) lease is equivalent to the purchase of an asset and the financing of the asset with a loan. At the time the lease is signed, an equal amount is entered into an asset account and a liability account. The asset account recognizes the company's claim to ownership of the capital. The liability account recognizes the company's obligation to make interest payments. B. A capital (or finance) lease is equivalent to the purchase of an asset and the financing of the asset with a loan. At the time the lease is signed, an equal amount is entered into an asset account and a liability account. The asset account recognizes the company's claim to the benefits from the leased assets. The liability account recognizes the company's obligation to make lease payments. C. A capital (or finance) lease is equivalent to the purchase of an asset and the financing of the asset with a loan. At the time the lease is signed, an equal amount is entered into an asset account and a liability account. The asset account recognizes the company's claim to the benefits from the leased assets. The liability account recognizes the company's obligation to make lease payments and is always recorded as a short-term liability. D. A capital (or finance) lease is equivalent to the purchase of an asset and the financing of the asset with a loan. At the time the lease is signed, the down payment that was made in cash is credited to cash and accounts payable is debited according to the terms of the lease. The asset account recognizes the company's claim to the benefits from the leased assets. The liability account recognizes the company's obligation to make lease payments