Which is not an indicator to classify the lease as a "finance" lease?
A)Transfer of ownership to the lessee at the end of the lease term.
B)A lease term that is 51% of the of asset's useful life.
C)A lease term that contains a bargain purchase option.
D)Minimum lease payments comprising 90% or more of the asset's fair value.

Question

Quizplus · Accepted Answer

A finance lease is characterized by the transfer of ownership to the lessee, a bargain purchase option, or lease payments that represent a substantial portion of the asset's fair value. A lease term being 51% of the asset's useful life is not a direct indicator for classifying a lease as a finance lease under most accounting standards.

Which Is Not an Indicator to Classify the Lease as a "Finance