adjustment for financial ratio

an analyst notes that the footnotes to the financial stattement for a leesee company indicate that the company leases a substantials portions of the facilities required for efficient operation. The present value of the lease is 30 million for facilities leased under captial leases and 20 million under operation leases. Other companies in the industry own their facilities. Before the analyst compares the company’s financial ratio with the industry’s ratio, the most appropriate adjustment to that company’s balance sheet would be to increase a both liabilities and assets by 20 m b both liabilities and assets by 50 m c libilities by 20 m and decrease equity by 20 m d liabilities by 50 m and decrease equity by 50 m

A. Treat the operating lease as capital, increase assets and liabilities by the PV of minimum lease payments, 20



is the answer a??

A is correct