Which of the following conditions qualifies a lease as a finance lease?
A) The leased asset is specific to the needs of the lessee and without significant changes would not be of use to another company.
B) The present value of the minimum lease payments covers substantially all of the fair value of the property at the inception of the lease.
C) The lease term covers the majority of the asset's economic life.
D) The lease transfers the risks and benefits of ownership to the lessee.
E) All of these answers are correct.

Question

Quizplus · Accepted Answer

All the conditions listed (A, B, C, and D) are criteria that can qualify a lease as a finance lease, as they indicate that the lessee assumes the risks and rewards of ownership.

Which of the Following Conditions Qualifies a Lease as a Finance