Alto Iax Co (Alto) is a tax company operating in I oronto that exclusively uses electric cars. The company is able to borrow from its bank at an annual incremental borrowing rate of 6%. The loan arrangement has a covenant based on the company's debt-toequity ratio. The company prepares its financial statements using ASPE. During 2022, Alto leased 120 new electric cars. It has an agreement in principle with the vendor, Cars Financing Inc., to lease the cars for a seven-year term, with monthly payments of $500 per car. The cars currently sell for $40,000 each. At the end of the lease, Alto may purchase the cars for $5,000 each, which is their estimated fair value at that time. The cars have a useful life of 10 years. Lease costs for 2022 have been expensed in the income statement. Required: Using the case writing methodology discussed in class for addressing financial reporting issues, analyze the above transaction and come to a supported conclusion