Assume That Souse Agrees to Lease a New Machine from Laird

Assume that Souse agrees to lease a new machine from Laird on January 1,2017,for $40,000 per year,paid in advance (i.e.,at the beginning of the year) .Executory costs are $1,000.The lease term is 11 years and the asset's useful life is 10 years.There is no bargain purchase option.The guaranteed residual value is $10,000.Which statement is correct?

A) The executor costs will be included in the minimum lease payments.
B) The guaranteed residual will be excluded in the minimum lease payments.
C) This is an operating lease because there is no bargain purchase option.
D) This is a finance lease since the lease term is for most of the economic life of the asset.

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