Problem: JK Company has the following balances on the 2008 B/S: current assets=70,000, long-term assets=250,000, current liability=40,000, long-term debt=130,000, and stockholders equity=150,000. The company has an operating lease contract. It promises to pay a lessor $10,000 annually for the next three years. The company s average borrowing rate (discount rate) is 10%. Which one is correct if the lease is recorded as a capital lease?
A Working capital will be increased
B Current ratio will be increased
C ROA will be increased
D None of the above