VidEqp Company, Inc., [VEI] manufactures equipment for use by studios producing movies. It leased a studio crane to Glamour Studios, Inc., [GSI] on January 1, 2016 on a 10-year lease. VEI reports under ASPE while GSI reports under IFRS. Both companies use the straight line method of amortization and December 31 as their year end. It was agreed that annual lease instalments of $99,000 would be charged at the beginning of the year.

The crane had a fair market value of $780,000 with a 15-year life. It was agreed that the crane would be returned unconditionally at the end of the lease term. The lessor estimated its value at the end of the lease to be $135,000 and the lessee offered no guarantee for its market value on the return date. The interest rate implicit in the lease was 7%. However since the lessor refused to disclose this information, the lessee used its incremental rate of 8% which was being charged by its bankers.

USE THE INFORMATION GIVEN ABOVE TO ANSWER QUESTIONS 23 - 29.

REQUIRED: Select the alphabet of the one best answer to each of the questions listed below and input it in the computer. Assume that GSI decides to classify the lease contract as a capital lease. This was done because

Select one:

a.

the contract met the criterion for the economic life test that most of the risks and rewards of ownership will accrue to the lessee, GSI during the term of the lease

b.

Common Share Capital, $616,400; Contributed Surplus - Common Shares Repurchased, $23,000; Retained Earnings, $3,300.

c.

the lease does not qualify as a low value lease or a less than one-year term lease

d.

the contract transfers the ownership rights back to the lessor at the end of the lease term and thus met the ownership criterion

e.

it does not know the implicit rate of the lease contract as used by the lessor, VEI