Answer: The lessee records an asset and a liability for the present value of lease payments.
Explanation:
A finance lease is different from an operating lease because the lessee takes on ownership responsibilities for the asset while it is in their possession. As such, they will have to record it as an asset.
The asset value of the lease will be the present value of all the lease payments. They will also have to record a liability to show that they owe those lease payments and this liability will be the present value of the lease payments as well.
