Ballard Power Systems Inc. designs, manufactures, and sells fuel cells and has its head office, research and development, and manufacturing facilities in Burnaby, British Columbia. Exhibit 10-18 presents Note 10 from Ballard's 2009 financial statements, which describes the company's capital (finance) lease obligations.
In Exhibit 10-18
BALLARD POWER SYSTEMS INC. 2009 ANNUAL REPORT
Excerpt from Note 10 to the Financial Statements
(Tabular amounts expressed in thousands of U.S. dollars)

Required:
Based on the information in the note, explain why Ballard's lease for the production and test equipment is classified as a finance (capital) lease rather than an operating lease.

Transcribed Image Text:

Year ending December 31 2010 2011 2012 2013 2014 Total minimum lease payments Less imputed interest at 2.25% Total obligation under capital lease Current portion of obligation under capital lease Long-term portion of oblion under capital lease $ 359 359 359 359 759 2,195 (140) 2,055 316 $ 1,739