Is this contract an operating or finance lease for lessee

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Question - Rizzo Iron Works signed a lease on January 1 with Seamus Bank for an? iron-stamping machine. The equipment is not specialized in nature. The lease has a 8?-year term with no purchase option or transfer of ownership. Under the terms of the? contract, Rizzo must pay $3,400 on January 1 of each year. Seamus ?Bank's implicit rate is 9%. The? iron-stamping machine has an economic life of 20 years and a fair value of $43,000. If Rizzo borrowed at Seamus ?Bank, the loan would carry an interest rate of 11%. The lessee knows the implicit rate. Is this contract an operating or a finance lease for the? lessee?

Reference no: EM132751052

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