Lease Classification: Best Car Inc. Best Car Inc. (Best) is a company based in Los Angeles that manufactures automobiles and exports the finished vehicles to Europe. Best manufactures two models; the most popular model is a four-door sedan (Sedan), and the other is a less common, highly customizable luxury sports car (Luxury Car). Best contracts Mersk Inc (Mersk) to ship its products to Europe. Mersk has a fleet of 10 multi-use shipping vessels, each with capacity for 2,000 vehicles. The terms of the shipping contracts are as follows: Sedan contract terms: o The term is five years. ?LV Pomona, a ship in Mersk's fleet, is dedicated to shipping Best's Sedans for the term of the contract. o Best determines (1) which European ports receive shipments and (2) the order in which deliveries are made to the ports; Best instructs Mersk accordingly. Best has the option to send the ship below capacity. If the ship is below capacity, Mersk cannot use the excess capacity to ship products of its other customers o Luxury Car contract terms: o The term is five years. o Mersk is required to deliver shipments of Luxury Cars within five weeks of notification from Best that an order of Luxury Cars is ready for shipping. Mersk may choose any ship from its fleet to complete the request. Best may provide 250 to 2,000 Luxury Cars in a single request; however, shipping requests of Luxury Car generally do not exceed 500 vehicles in a single request because of the lower production volume and longer manufacturing time of Luxury Car Mersk has the option to use excess capacity to ship products of its other customers. After notification from Best that Luxury Cars are ready to ship, Mersk determines when within the five-week period to ship the cars, as well as the shipping route. o o o o Best's CFO understands that the new leasing standard has certain provisions that may affect how the company treats contracts of this nature. Analyze the above and prepare a case report addressing the impact (if any) of the new leasing standard Required: on Best's shipping arrangements for the following considerations: 1. Determine whether each of Best's contracts with Mersk for Sedan and Luxury Car contains an identified asset. termine whether each contract conveys the right to control the use of the identified asset to the lessee