By leasing an asset for less than 75% of its economic life or less than 90% of its fair market value, a company may avoid classifying the lease as a capital lease.

Question

Quizplus · Accepted Answer

A lease is classified as an operating lease if it does not meet the criteria for a capital lease, which includes the lease term being less than 75% of the asset's economic life and the present value of lease payments being less than 90% of the asset's fair market value.

By Leasing an Asset for Less Than 75% of Its