I know the answer is choice b. is the lessee in a capital lease. I was told the lease term was 7 years, but how can that be possible. The amount of years between Dec 31, 2015 to Dec 31, 2021 is 6 years. 6 years doesn't satisfy the 75% of useful life rule. (6/9=66.67% which is not greater than 75%) , is there any other way to distinguish this as a capital lease? explain please? thanks.

On December 31, 2015, Reagan Inc. signed a lease for some equipment having a nine-year useful life

with Silver Leasing Co. The lease payments are made by Reagan annually, beginning at signing date. Title does not transfer to the lessee, so the equipment will be returned to the lessor on December 31, 2021. There is no bargain purchase option, and Reagan guarantees a residual value to the lessor on termination of the lease. Reagan lease amortization schedule appears below:

Dec 31	Payments	Interest	Decrease Balance	Balance
2015				$519,115
2015	$90,000		$90,000	$429,115
2016	$90,000	$17,165	$72,835	$356,280
2017	$90,000	$14,251	$75,749	$280,531
2018	$90,000	$11,211	$78,779	$201,752
2019	$90,000	$8,070	$81,930	$119,822
2020	$90,000	$4,793	$85,207	$34,615
2021	$36,000	$1,385	$34,615	$0

In this situation, Reagan: a. is the lessee in a sales-type lease. b. is the lessee in a capital lease. c. is the lessor in a capital lease. d. is the lessor in a sales-type lease.