1) Omega leased a machine for an initial ten-year term. At the end of the ten-year term, Omega has five consecutive one-year renewal options. A replacement machine can be acquired at the end of the term for the leased machine, but due to an expensive installation process and Omega's lease term for its store, Omega expects to lease the machine for 12 years. For purposes of classifying and accounting for this lease, what should Omega use as a lease term? A) 12 years B) 10 years C) 11 years D) 15 years 2) Minnetonka Company leases an asset. Information regarding the lease: Fair value of the asset: $400,000. Useful life of the asset: 6 years. Lease term: 5 years. Annual lease payments: $60,000. Present value of lease payments: $246, 147. The lease has no purchase option D) Operating What type of lease is this for Minnetonka (the lessee)? A) Short term. B) Sales. C) Finance 3) In an operating lease: A) the lessor records a receivable for the present value of lease payments. B) the lessee records an asset and a liability for the present value of lease payments. C) the lessor records interest revenue. D) the lessee records an asset and a liability for the total of the lease payments. 4) From the perspective of the lessor a lease may be classified as: A) operating or sales-type. B) operating or finance. C) finance or short-term. D) sales-type or indirect. 1) Omega leased a machine for an initial ten-year term. At the end of the ten-year term, Omega has five consecutive one-year renewal options. A replacement machine can be acquired at the end of the term for the leased machine, but due to an expensive installation process and Omega's lease term for its store, Omega expects to lease the machine for 12 years. For purposes of classifying and accounting for this lease, what should Omega use as a lease term? A) 12 years B) 10 years C) 11 years D) 15 years 2) Minnetonka Company leases an asset. Information regarding the lease: Fair value of the asset: $400,000. Useful life of the asset: 6 years. Lease term: 5 years. Annual lease payments: $60,000. Present value of lease payments: $246, 147. The lease has no purchase option D) Operating What type of lease is this for Minnetonka (the lessee)? A) Short term. B) Sales. C) Finance 3) In an operating lease: A) the lessor records a receivable for the present value of lease payments. B) the lessee records an asset and a liability for the present value of lease payments. C) the lessor records interest revenue. D) the lessee records an asset and a liability for the total of the lease payments. 4) From the perspective of the lessor a lease may be classified as: A) operating or sales-type. B) operating or finance. C) finance or short-term. D) sales-type or indirect