We classify a lease as a finance lease if:
A) the present value of lease payments is less than the asset's book value.
B) the present value of lease payments is less than the asset's fair value.
C) the lessee obtains control of the use of the asset.
D) the usual risks and rewards are retained by the lessor.

Question

Quizplus · Accepted Answer

We have a finance lease if the lease transfers substantially all the risks and rewards of ownership of the underlying asset.

We Classify a Lease as a Finance Lease If