An Airline Has the Following Data About an Airplane: Annual

An airline has the following data about an airplane: Annual lease cost $8,000,000
Lease term: 8 years
Useful life of airplane: 35 years
Fair market value of leased asset: $83 million
Present value of lease payments: $78 million
Bargain purchase option: None
Transfer to lessor at end of lease? Yes
Is this a capital or operating lease? Why?

A) This is an operating lease. It fails all of the capital lease criteria.
B) This is a capital lease because the substance of the transaction is a capital lease.
C) This is a capital lease because it meets at least one of the four capital lease criteria.
D) This is a capital lease because the leased asset cost exceeds $5 million.