1. Explain what is a lease. Leases 2. One of the advantages of leasing rather than purchasing an asset is that leasing offers flexibility and a lower cost when disposing of the asset. Explain 3. A lessee should classify a lease transaction as a finance lease if it is noncancelable and one or more of five classification criteria are met. Otherwise it is an operating lease. What are these criteria? 4. In accounting for an operating lease, how are the lessee's and lessor's income statement affected? 5. In accounting for a finance lease/sales type lease, how are the lessee's and lessor's income statement affected?