Which of the following are characteristics of financial or capital leases?
A) I and II
B) II and III
C) I and III
D) I, II and III
I.The lease term is equal to 75 percent or more of the economic life of the leased property.
II.The present value of the minimum lease payments is equal to 70 percent or more of the fair value of the leased property at the inception of the lease.
III.Provisions are made such that ownership of the leased property is transferred to the lessee at the end of the lease term.

Question

Quizplus · Accepted Answer

Characteristics of financial or capital leases include:
I. The lease term is equal to 75 percent or more of the economic life of the leased property.
III. Provisions are made such that ownership of the leased property is transferred to the lessee at the end of the lease term. 
II. The present value of the minimum lease payments is equal to 70 percent or more of the fair value of the leased property at the inception of the lease. Thus, the correct answer is C, as it includes these characteristics.

Which of the Following Are Characteristics of Financial or Capital