he should increase reported total liabilities by an amount closest to

The notes to the financial statements of Bargain Apparel Corp. disclose that the company has finance lease commitments with minimum future payments of $20 million, of which $6 million represents interest payments. It also has operating leases with minimum future payments of $25 million. If Robert Xu, CFA, wishes to adjust the financial statements to treat all leases as debt, he should increase reported total liabilities by an amount closest to

a. $17.5 million.

b. $25.0 million.

c. $45.0 million.

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