Which of the following is not a condition which would require the recording of a lease contract as a capital lease?
A) The lease transfers ownership of the property to the lessee.
B) The lease contains a bargain purchase option.
C) The lease term is less than 75% of the economic life of the leased property.
D) The present value of the lease payments equals or exceeds 90% of the fair market value of the leased property.

Question

Quizplus · Accepted Answer

According to the Financial Accounting Standards Board (FASB), a lease contract must be recorded as a capital lease if it meets any one of the following conditions: 
A) The lease transfers ownership of the property to the lessee. 
B) The lease contains a bargain purchase option. 
D) The present value of the lease payments equals or exceeds 90% of the fair market value of the leased property. 
However, if the lease term is less than 75% of the economic life of the leased property, it does not meet the criteria for a capital lease and should be recorded as an operating lease.

Which of the Following Is Not a Condition Which Would