Presented below are three different lease transactions in which Ortiz Enterprises engaged in 2010.Assume that all lease transactions start on January 1, 2010. In no case does Ortiz receive title to the properties leased during or at the end of the lease term.

Instructions(a) Identify the leases above as operating or capital leases. Explain.(b) How should the lease transaction for Flynn Co. be recorded on January 1, 2010?(c) How should the lease transaction for Miley Inc. be recorded in2010?

Lessor Flynn Co. Truck None 6 years Renner Co. Bulldozer Miley Inc. Furniture None 3 years 5 years $ 3,000 Type of property Bargain purchase option Lease term Estimated economic life Yearly rental Fair market value of leased asset Present value of the lease rental payments None 4 years 8 years 7 years $13,000 $20,000 $20,500 $80,000 $96,000 $48,000 $82,000 $ 9,000