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choose the correct answer: which of the following arrangements would most likely be accounted for as...

choose the correct answer:
which of the following arrangements would most likely be accounted for as an operating lease by the lessee
A- the lease agreement runs for 16 years and the economic life of the leased property is 20 years
B- the present value of the minimum lease payments is $57,000 and the fair value of the leased property is $60,000.
C- the lease agreement allows the lessee the right to purchase the leased asset for $1.00 when half of the asset's economic useful life has expired.
D- the lessee may renew the two- years lease for an additional two years at the same rental

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Answer #1
Answer is
D- the lessee may renew the two- years lease for an additional two years at the same rental
If the lease term covers more than 75% of the useful life of asset,it is a financial lease
Hence,Option A is wrong
If the present value of minimum lease payment covers more than 90% of the fair value of the leased property, it is a financial lease
Hence,Option B is wrong
If the lease agreement allows the lessee the right to purchase leased asset,it is a financial lease
Hence,Option C is wrong
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