Which of the following is not a condition which would require the recording of a lease contract as a finance lease?
A) The lease transfers ownership of the property to the lessee.
B) The lease contains a bargain purchase option.
C) The lease term is less than 75% of the economic life of the leased property.
D) The present value of the lease payments equals or exceeds 90% of the fair value of the leased property.

Question

Quizplus · Accepted Answer

According to IFRS 16, a lease is recorded as a finance lease if it meets any one of the following conditions:
1. The lease transfers ownership of the property to the lessee.
2. The lease contains a bargain purchase option.
3. The lease term is for a major part of the economic life of the leased property.
4. The present value of the lease payments equals or exceeds substantially all of the fair value of the leased property. 
Option C states that the lease term is less than 75% of the economic life of the leased property, which means it does not meet the criteria for recording as a finance lease.

Which of the Following Is Not a Condition Which Would