400 WordsABC company enters into a lease agreement with XYZ corporation for lase

400 WordsABC company enters into a lease agreement with XYZ corporation for laser tech machines. The lease agreement qualifies as an operating lease. However there is one thing that stands out. There is a bargain-purchase option. After the 3-year lease term each laser tech machine can be purchased for $500 even though the market value is $850.You are the controller of ABC company. You feel that the machine should be recorded as a capital lease because of the bargain-purchase option. Your manager Martha feels that at the end of the 3-year term the laser tech will not be worth $500 because of rapid advances in technology.