One of the five criteria for a finance lease specifies that the present value of the lease payments be equal to or greater than:
A) substantially all of the cost of the asset.
B) the major part of the fair value of the asset.
C) substantially all of the fair value of the asset.
D) the major part of the cost of the asset.

Question

Quizplus · Accepted Answer

One of the criteria for a finance lease is that the present value of the lease payments amounts to substantially all of the fair value of the leased asset. This ensures that the lessee gains most of the benefits of ownership.

One of the Five Criteria for a Finance Lease Specifies