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A piece of manufacturing machinery is to be leased by the Jones Company. The machine has a useful life of 10 years. The term of

A piece of manufacturing machinery is to be leased by the Jones Company. The machine has a useful life of 10 years. The term of the lease is 2 years. Jones Company, as the lessee, will be

able to deduct 100% of the monthly lease payments as Rental Expense on its income statement. At the end of the lease term, the machine will be still be owned by the leasing company and will be returned to that company by the lessee. What type of lease has been entered into by the Jones Company?

capital lease
debt lease
operating lease
purchase

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