Present Value of Leased Payment

debit Leasehold asset
depreciation is a non cash flow item and won't affect cash flow statement
depreciation impact income statment

credit Leasehold liability
as we keep on paying (principal payment increasing), leasehold liability keeps dropping
interest payment is decreasing (take note that for ARO, interest payment is increasing)
This will impact cash flow. principal will impact cash flow (cff), interest will impact cfi.