Task: Indicate whether each of the following independent transactions is a capital (C) or operating (O) lease.
1) __________ A firm signs a 5-year lease for equipment with a 7-year life.
2) __________ A firm signs a lease for property with a fair market value of $20,000. The present value of the lease payments is $16,000.
3) __________ A firm signs a lease for equipment which will allow the lessee to purchase the equipment at the end of the lease for one-half the fair market value.
4) __________ A firm signs a 16-year lease for equipment with a 20-year life.
5) __________ A firm signs a lease for property with a fair value of $90,000. The present value of the lease payments is $85,000.