According to the FASS-issued Statement 13, which of the following statements is true? Leased assets should be reported as current assets on the balance sheet. Assets leased under financial or capital leases should be reported as fixed assets on the balance sheet. The present value of all future lease payments should be reported as assets on the balance sheet. The present value of all past lease payments should be reported as a liability on the balance sheets Consider the following statement on capital teases: According to Statement 13, the payments on a financial lease should be treated as an operating expense and should not in any case affect a firm's true debt ratio. Is the preceding statement true or false? True False To consider the financial statement effects of leasing versus purchasing an asset, review the following case of Shoe Building Inc. Shoe Building Inc. needs equipment that will cost the company $200. Shoe Building Inc. is considering to either purchase the equipment by borrowing $200 from a local bank or leasing the equipment. Assume that the lease will be structured as an operating lease. Some data from Shoe Building Inc.'s current balance sheet prior to the lease or purchase of the equipment are: Balance Sheet Data (Dollars) Current assets $600 Debt $500 Net fixed assets 400 Equity 500 Total assets $1,000 Total claims $1,000 1. The company's current debt ratio is 2. If the company purchases the equipment by taking a loan, the total debt in the balance sheet will and the debt ratio will change to 3. If the company leases the equipment, the company's debt ratio will because the lease is not capitalized. 4. In this case, the company's financial risk will be under a lease agreement as compared to the financial risk in purchasing the equipment by taking a loan 5. However, if the lease is capitalized, the financial risk under the lease agreement will be as compared to the risk in buying the equipment