The Ethics of Leasing Arrangements

Scenario: Greeley Golf and Country Club is considering leasing some equipment: 25 golf carts with GPS ball tracking - The fair value of each cart is $10,800. After three years, the company can purchase each cart for $8000. The fair value of the carts is expected to be $8,500 at that time. The useful life is expected to be 7 years. Specialized turf mower - the mower has a computerized function that automatically adjusts the height of the blade to account for minute variances in the topography of the putting greens. This prevents "scalping" of the very valuable turf grass. The mower has a useful life of 7 years. Current fair value is $75,000. The present value of the lease payments is $60,000, assuming that Greeley Golf would lease the mower for 5 years. Jane York, the company Controller, and Tony Hawkins are discussing possible leasing terms. Jane believes that the company should lease the carts for 3 years, and the mower for 5 years since the company needs this equipment to expand operations, and satisfy shareholder expectations. Tony Hawkins, the company President, would prefer to negotiate 1-year lease terms, with options to renew each year.

Please discuss the following questions for my initial post:

Do the leases qualify as short-term, regular operating or financing leases? Explain your reasoning.

Why would Mr. Hawkins prefer to have only one year terms for the leases?

Are there any ethical considerations at stake?