Which of the following statements is NOT true for the Reinhardt Company?

On December 31, Year One, the Reinhardt Company owns a tractor and leases it to the Smith Company. The tractor has a life of five years but the lease is only for four years. Which of the following statements is NOT true for the Reinhardt Company?
If this is a sales-type lease, profit will be recognized immediately with interest revenue then recognized over the next four years.
If this is a direct financing lease, no profit is recognized immediately but interest revenue is recognized over the next four years.
Based on the information, this might be an operating lease or it might be a capital lease.
Reinhardt must base the computation of interest revenue on the imputed interest rate built into the contract.

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