My company is going to lease a scissor lift from A-1 Equipment that will help us clean the windows on our buildings. If we were to purchase the lift, it would cost $20,000. The lift has an estimated life of 10 years and we have an 8-year lease term. Our monthly lease payment is going to be $200. At the end of the lease, A-1 Equipment will retain ownership of the lift. We do not have an option to purchase the equipment. Based on just this information, how will we need to account for this leased item on our financial records.
Select one: A. The item must be accounted for as a Capital Lease.
B. The item must be accounted for as an Operating Lease.
C. There is insufficient information given to assess whether or not this needs to be accounted for as either a Capital or Operating Lease.