Which of the following is not a condition that requires capital lease accounting?
A) The lease term extends for more than 70% of the assets economic life.
B) The lease agreement transfers ownership of the leased asset to the lessee.
C) The lease agreement contains a bargain purchase option.
D) The present value of the minimum lease payments equals or exceeds 90% of the fair market value of the asset.

Question

Quizplus · Accepted Answer

The correct threshold for capital lease accounting is that the lease term extends for more than 75% of the asset's economic life, not 70%.

Which of the Following Is Not a Condition That Requires