Which of the following statements is true?

The Turpen Company buys a machine for $30,000. Normally, the machine would be sold to a customer for $42,000. However, in hopes of expanding the number of available customers, Turpen leases the machine for 4 years to the Royal Corporation. The accountants for the Turpen Company are currently studying how this lease should be recorded for financial reporting purposes. Which of the following statements is true?
Because this property is normally sold, the lease contract must be recorded as a capital lease by Turpen.
Because this property is normally sold, the lessee (Royal) must report it as a sales-type lease.
If the machine has an expected life of five years, then both parties must report the transaction as a capital lease.
If the lease contract gives Royal the option to buy the machine at the end of four years, then both parties must report the transaction as a capital lease

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