Under the provisions of ASU 2016-02 which of the following is not a criterion to use in determining whether a lessee should classify a lease as a finance lease?
A)The lease transfers ownership of the underlying asset to the lessee by the end of the lease term
B)The lease grants the lessee an option to purchase the underlying asset the lessee is reasonably certain to exercise
C)The lease term is for the major part of the remaining economic life of the underlying asset
D)The present value of the sum of the lease payments and any residual value guaranteed by the lessee equals or exceeds 50 percent of the fair value of the underlying asset.

Question

Quizplus · Accepted Answer

The correct criterion is that the present value of the lease payments and any residual value guaranteed by the lessee equals or exceeds substantially all (typically 90% or more) of the fair value of the underlying asset, not 50%.

Under the Provisions of ASU 2016-02 Which of the Following