A substantial difference between U.S. GAAP and IFRS concerns leases. Under U.S. GAAP, leases are classified as capital if one or more of the following criteria are met: title transfer, bargain purchase option, lease terms are equal to or greater than 90 percent of the asset's economic life, and if the minimum lease payments are greater than or equal to 40 percent of the asset's fair market value.

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Under U.S. GAAP, leases are classified as capital (now called finance leases) if they meet any of the following criteria: title transfer, bargain purchase option, lease term is 75% or more of the asset's economic life, or the present value of lease payments is 90% or more of the asset's fair market value. The 40% criterion is incorrect.

A Substantial Difference Between U