25. [Analysis of lessor and lessee] On January 1, 2001, the Mal- bec Company leases a Willmess winepress to the Baldes Group under the following conditions: (i) Annual lease payments are $20,000 for 20 years. (ii) At the end of the lease term, the press is expected to have a value of $5,500 (iii) The fair market value of the press is $185,250. (iv) The estimated economic life of the press .s 30 years (v) Malbec's implicit interest rate is 12%; Baldes' incre- mental borrowing rate is 10%. (vi) Malbec reports similar presses at $150,000 in finished- goods inventory.

a. Based on the data given, state whether Baldes should treat this lease as an operating or a capital lease. Justify your an- swer. What additional information would help to answer the question?