Cullumber Company leases a building to Marin, Inc. on January 1, 2020. The following facts pertain to the lease agreement. Ownership does not transfer at the end of the lease term, there is no bargain purchase option, and the asset is not of a specialized nature. 1. The lease term is 4 years, with equal annual rental payments of $6,064 at the beginning of each year. 2. 3. 4. 5. The building has a fair value of $25,000, a book value to Cullumber of $18,000, and a useful life of 5 years. At the end of the lease term, Cullumber and Marin expect there to be an unguaranteed residual value of $4,500. Cullumber wants to earn a return of 8% on the lease, and collectibility of the payments is probable. Marin was unaware of the implicit rate used in the lease by Cullumber and has an incremental borrowing rate of 9%. Click here to view factor tables. How would Cullumber (lessor) and Marin (lessee) classify this lease? Cullumber would classify the lease as a sales-type lease. Marin would classify the lease as a finance lease.