Under ASPE criteria, which of the following are characteristics of financial or capital leases?
I.The lease term is equal to 75 percent or more of the economic life of the leased property.
II.The present value of the minimum lease payments is equal to 70 percent or more of the fair value of the leased property at the inception of the lease.
III.Provisions are made such that ownership of the leased property is transferred to the lessee at the end of the lease term.
A)I and II
B)II and III
C)I and III
D)I, II and III

Question

Quizplus · Accepted Answer

Under ASPE, a lease is classified as a capital lease if it meets certain criteria, including that the lease term is 75% or more of the economic life of the asset (I) and if ownership is transferred to the lessee at the end of the lease term (III). The present value criterion is typically 90%, not 70%, so II is incorrect.

Under ASPE Criteria, Which of the Following Are Characteristics of Financial