On $1$ January $2008,$ Joyful Limited entered into an agreement to lease a machine for general use in the business. The agreement, which may not be terminated by either party to it$,$ runs for seven years and provides for Joyful Limited to make an annual rental payment of $$92,500$ on $31$ December each year. The cost of the machine to the lessor was $$450,329$ and has no residual value. There is no presumption that the lease will be extended. The machine has a useful economic life of eight years and Joyful Limited depreciates its property, plant and equipment using the straight$-$line method.

The lessor has suggested that the lease could be drawn up with a minimum payment period of one year and an option to renew or purchase. The lessor alleges that this would mean the lease could be kept $$off balance sheet$.$ Please discuss the rationale underlying this suggestion