Each of the four independent situations below describes a lease requiring annual lease payments of $10,000. For each situation, determine the appropriate lease classification by the lessee and indicate why. Table Summary: Summary Lease term (years) Asset's useful life (years) Asset's fair value Purchase option that is reasonably certain to be exercised? Annual lease payments Lessor's implicit rate (known by lessee) Lessee's incremental borrowing rate Situation 1 2 3 4 4 4 4 6 5 6 6 $44,000 $45,000 $41,000 $38,500 No Yes No No Beg. of yr. End of yr. Beg. of yr. End of yr. 5% 6% 5% 6% 5% 5% 5% 5%