Novak Corporation has signed a $5-$year lease for machinery with a cost of $$224,000.$ The asset

has an economic life of $9$ years with zero salvage value. Annual minimum lease payments made

at the end of year are $$38,000$ and the discount rate is $6\%.$ There is no bargain purchase option

available on the lease. Identify whether the machinery should be treated as an operating or

capital lease assuming Novak follows ASPE. The machinery should be treated as a$($n$)$

a$)$ right$-$of$-$asset.

b$)$ capital lease.

c$)$ short$-$term or low$-$value lease.

d$)$ operating lease.