Which of the following criteria would not apply in determining if a lease is a capital lease if the beginning of the lease term falls within the last 25% of the total estimated economic life of the leased asset?
A)the lease is non-cancellable
B)the lease contains a bargain purchase option
C)the lease transfers ownership of the property to the lessee by the end of the lease term
D)the lease term is equal to 75% or more of the estimated economic life of the leased property

Question

Quizplus · Accepted Answer

The criterion that the lease term is equal to 75% or more of the estimated economic life of the leased property does not apply if the beginning of the lease term falls within the last 25% of the total estimated economic life of the leased asset. This is because this specific criterion is designed to identify situations where the lessee effectively gains control over the asset for the majority of its useful life, which is not relevant when the lease starts towards the end of the asset's economic life.

Which of the Following Criteria Would Not Apply in Determining