A lease which contains a bargain purchase option, but which has a term equal to only 70% of the estimated economic life of the leased property cannot properly be classified as a finance lease by a lessee.

Question

Quizplus · Accepted Answer

A lease can be classified as a finance lease by the lessee if it meets any of the criteria set forth by accounting standards, such as containing a bargain purchase option, regardless of the lease term's percentage of the estimated economic life of the leased property.

A Lease Which Contains a Bargain Purchase Option, but Which