Question: KLQ is the lessee in the two following lease contracts. Contract X: KLQ leases an asset for a non-cancellable period of five years with annual rental of K$10,000. KLQ has the option to extend the lease for another three years at an annual rental of K$50. The asset is capable of delivering economic benefits over its useful life of eight years. Contract Y: KLQ leases an asset for ten years for an annual rental of K$20,000. For the first nine years, neither party can terminate the contract. In the final year of the contract, KLQ has the right to terminate the lease without incurring a termination penalty. Historically, this type of asset has generated economic benefits for KLQ for up to nine years. Which of the following are the lease terms of these two contracts? Solution A. Contract X: five years. Contract Y: nine years. B. Contract X: eight years. Contract Y: ten years. C. Contract X: five years. Contract Y: ten years. D. Contract X: eight years. Contract Y: nine years.