If the lease term is at least 70% of the estimated economic life of the asset, this would cause a lease to be declared a capital lease for accounting purposes.

Question

Quizplus · Accepted Answer

The correct threshold for a lease to be considered a capital lease (now called a finance lease under IFRS 16 and ASC 842) is if the lease term is at least 75% of the estimated economic life of the asset, not 70%.

If the Lease Term Is at Least 70% of the Estimated