Criteria for Capital Leases Indicate which of the following leases would be a capital lease and which would be operating leases.

a. Rental of an automobile on a 3-month lease for $500 per month. The auto will be returned to the dealer after the 3 months.

b. Rental of a crane for $8,000 per month on a 6-year lease, with an option to buy for $10,000 at the end of the 6 years when its fair value is $150,000.

c. Rental of a computer for $1,000 per month on a 5-year lease. At the end of 5 years, the computer is expected to have a fair market value of zero.

d. Rental of 10 forklifts for $1,400 per month on an 8-year lease. The value of the forklifts at the end of 8 years is uncertain, but the total economic life is not expected to be more than 10 years.

e. Rental of a warehouse for $10,000 per month, renewable annually.