Assume that the five classification criteria are applied to a lease involving equipment and, because none of the criteria is met, it is determined that a lease should be classified as an operating lease. At the beginning of the lease, the lessee:

Multiple Choice

• a. Does not record an entry.

• b. Records an entry that includes a debit to Right-of-use asset for the carrying amount of the equipment.

• c. Records an entry that includes a debit to Right-of-use asset for the present value of the lease payments.

• d. Records an entry that includes a debit to Equipment for the present value of the lease payments.