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 a minor portion of the economic life of the leased property.
D) The present value of the lease payments represents substantially all of the fair value of the leased property.

Question

Quizplus · Accepted Answer

According to the criteria outlined in accounting standards, a lease contract must meet at least one of the following conditions to be recorded as a finance lease: (A) the lease transfers ownership of the property to the lessee, (B) the lease contains a bargain purchase option, or (D) the present value of the lease payments represents substantially all of the fair value of the leased property. Option (C) is not a condition for a lease to be recorded as a finance lease.

Which of the Following Is Not a Condition Which Would