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For Accounting Purposes,which One of the Following Conditions Would Automatically

Question 4

Multiple Choice

For accounting purposes,which one of the following conditions would automatically cause a lease to be classified as a capital lease?

A) The lessee can purchase the asset at fair market value at the end of the lease.
B) The lease transfers ownership of the asset to the lessee by the end of the lease term.
C) The lease term equals 60 percent or more of the asset's estimated economic life.
D) The present value of the lease payments equals 75 percent of the asset's fair market value at lease inception.
E) The lessor can renew the lease at the end of the lease term.

Correct Answer: