Detailed Answer
(c) The requirement is to identify the proper accounting
for an operating lease. Answer (c) is correct because an operating
lease is one that does not meet the criteria to be a capital
lease. Operating leases are treated as rental agreements and the
payments are expensed as rent as incurred. Answer (a) is incorrect
because it describes the proper accounting for a capital lease.
Answers (b) and (d) are incorrect because they describe accounting
that is not proper for either type of lease.