QUESTION/ SOALAN MARKS/MARKAH 1. You are required to justify the following situations whether the lease agreement is to be categorised as a finance lease or an operating lease. (a) A company has entered into a four-year lease for a machine usage, with lease rentals of RM150,000 payable annually in advance, and with an optional secondary period of three years at rental rates of 80%, 60% and 40% of the annual rental in the primary period. It is agreed that these rental rates represent a fair commercial rate. The machine has a useful life of eight years and a cash value of RM600,000. ( 10 )