David Corporation NOTE: The following multiple choice questions require present value information. On January 1, Year 1, David Corporation signed a five-year non-cancelable lease for certain machinery. The terms of the lease called for. 1) Price to make annual payments of $60,000 at the end of each year (starting on Dec. 31, Year 1) for five years. Porter must return the equipment to the lessor end of this period. 2) 3) 4) The machinery has an estimated useful life of 6 years and no expected salvage value. David uses the straight-line method of depreciation for all of its fixed assets. David's incremental borrowing rate is 7%. 5) The fair value of the asset at January 1, Year 1 is $275,000. What accounting method should David use to account for the equipment lease? Oa. Lessee Accounting method Ob. Equipment Lease method Oc Capital Lease method Od. Operating Lease method