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All of the Following Are Criteria for Capital Leases Except

Question 2

Multiple Choice

All of the following are criteria for capital leases except:

A) the lease terms provide for the transfer of the ownership title of the property to the lessee at the end of the lease term
B) the lease contains an option to purchase the asset at a bargain price
C) the present value of the minimum lease payments is less than 90 percent of the current fair market value of the asset (less any investment tax credit retained by the lessor)
D) the lease term is equal to or greater than 75 percent of the estimated economic life of the asset

Correct Answer: