Exercise 15-1 (Static) Lease classification [LO15-1]

	Situation
	1	2	3	4
Lease term (years)	4	4	4	4
Assets useful life (years)	6	5	6	6
Assets fair value	$44,000	$45,000	$41,000	$38,000
Purchase option that is reasonably
certain to be exercised?	No	Yes	No	No
Annual lease payments	Beg. of yr.	End of yr.	Beg. of yr.	End of yr.
Lessors implicit rate (known by lessee)	5%	6%	5%	6%
Lessees incremental borrowing rate	5%	5%	5%	5%

Each of the four independent situations above describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)