Final answer:
c) Short lease term. A short lease term indicates that the lessee should not classify a lease as a finance lease under ASC 842.
Step-by-step explanation:
The correct answer is c) Short lease term. The ASC 842 standard provides criteria for classifying a lease as a finance lease. According to ASC 842, a lease should be classified as a finance lease if it meets any one of the following criteria: (1) the lease term is for the major part of the remaining economic life of the underlying asset, (2) the present value of the lease payments and any residual value guarantees represents substantially all of the fair value of the underlying asset, (3) the lease includes an option for the lessee to purchase the underlying asset that the lessee is reasonably certain to exercise, or (4) the underlying asset is specialized and the lease provides that at the end of the lease term the lessee is expected to obtain substantially all of the economic benefits from the asset. Therefore, a short lease term (option c) would indicate that the lessee should not classify the lease as a finance lease.