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On What Basis Would the Following Lease Most Likely Be

Question 37

Multiple Choice

On what basis would the following lease most likely be classified as a capital lease? On what basis would the following lease most likely be classified as a capital lease?   A)  A bargain purchase option B)  It would not be classified as a capital lease C)  Lease term is equal to 75 percent or more of the economic life D)  Title of the property transfers automatically at the end of lease period E)  Present value of the minimum lease payments at the beginning of the lease is equal to or greater than 90 percent of the value of the leased asset.


A) A bargain purchase option
B) It would not be classified as a capital lease
C) Lease term is equal to 75 percent or more of the economic life
D) Title of the property transfers automatically at the end of lease period
E) Present value of the minimum lease payments at the beginning of the lease is equal to or greater than 90 percent of the value of the leased asset.

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