Reed Machinery just signed a capital lease agreement with a present value of $260,000. How would this lease first appear on Reed Machinery?s balance sheet?

A. Capital leases do not appear on the balance sheet.

B. Assets under capital lease $260,000; Obligations under capital lease $260,000

C. Assets under capital lease $130,000; Obligations under capital lease $130,000

D. Assets under capital lease $260,000; Retained earnings committed to leases $260,000

E. Assets under capital lease $130,000; Retained earnings committed to leases $130,000