Which of the following factors will classify a lease as a capital lease for accounting purposes?

If the lease transfers ownership of the asset to the lessee by the end of the lease, this will classify the lease as a capital lease for accounting purposes.

Question

Which of the following factors will classify a lease as a capital lease for accounting purposes?

If the lease transfers ownership of the asset to the lessee by the end of the lease, this will classify the lease as a capital lease for accounting purposes.

Quizplus · Accepted Answer

If a lease agreement includes a provision that transfers ownership of the asset to the lessee by the end of the lease term, it meets one of the criteria for classification as a capital (or finance) lease under accounting standards.

Which of the Following Factors Will Classify a Lease as a Capital