Which One of the Following Will Classify a Lease as a Capital

Which one of the following will classify a lease as a capital lease for accounting purposes?

A) The lease transfers ownership of the asset to the lessee by the end of the lease.
B) The lease term is 75 percent or less of the estimated economic life of the asset.
C) The lessee can buy the asset at fair market value at the end of the lease.
D) The initial present value of the lease payments equals or exceeds 80 percent of the fair market value of the asset.
E) The total of the lease payments exceeds $100,000.

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free