On March 1 of the current year, Hill Corporation leased sound equipment from McEntire Company. The equipment has a life of 8 years. There is no bargain purchase option or passage of title. For the lease to be considered a capital lease, it must have a term of at least ________.

Question

Quizplus · Accepted Answer

For a lease to be considered a capital lease, it must meet certain criteria, one of which is that the lease term is 75% or more of the asset's useful life. 75% of 8 years is 6 years.

On March 1 of the Current Year, Hill Corporation Leased