Which of the following facts would require a lessee to classify a lease as a capital lease?
A)The lease term is 85% of the estimated economic life of the leased property.
B)The present value of the minimum lease payments is 85% of the fair market value of the leased property to the lessor, less any investment tax credit accruing to the lessor.
C)The lease contains a purchase option.
D)The lease does not transfer ownership of the leased property.

Question

Quizplus · Accepted Answer

A lease is classified as a capital lease if it meets any of the criteria set by accounting standards, one of which is that the lease term is 75% or more of the estimated economic life of the leased property. In this case, the lease term is 85%, which meets the criteria for a capital lease.

Which of the Following Facts Would Require a Lessee to Classify