Question: Lease A does not contain a bargain purchase option or transfer ownership of the property to the lessee by the end of the lease term,

Lease A does not contain a bargain purchase option or transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 90 percent of the estimated economic life of the leased property and the present value of lease payments is equal to 70 percent of the estimated fair value of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term or contain a bargain purchase option, but the present value of lease payments is equal to 85 percent of the estimated fair value of the leased property and the lease term is equal to 70 percent of the estimated economic life of the leased property. How should the lessee classify these leases? Lease A Lease B a. Operating lease Finance lease b. Operating lease Operating lease c. Finance lease Finance lease d. Finance lease Operating lease

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