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Question 4: A Lessee enters into a 3-year lease contract to lease a computer with...

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Question 4: A Lessee enters into a 3-year lease contract to lease a computer with annual lease payments of $10,000 to be paid at the ending of each year. Lessee's borrowing rate is i0%. Answer each question independently, Assume a straight line depreciation method to calculate depreciation expense. Present value ofan ordinary annuity of S i : PVF-OA (3, 10%)-2.48685 a) If this is classified as a capital lease, compute i that the lessee should recognize in the income statement for the first year interest expense and depreciation expense b) If this lease is classified as an operating lease, the lessee would report $10,000 as lease expense. Based on your answer to a), what type of lease (operating or capital lease) does the lessee prefer if the lessee wants to report a higher net income for the first year

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