For accounting purposes, which of the following conditions would automatically cause a lease to be a capital lease?
A)The lessee can purchase the asset below 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.
C)The lease term is more than 75% of the asset's economic life.
D)The present value of the lease payments is more than 90% of the asset's market value at lease inception.
E)All of the above would lead to the lease being considered a capital lease.

Question

Quizplus · Accepted Answer

All the conditions listed (A, B, C, and D) are criteria that can cause a lease to be classified as a capital lease under accounting standards.

For Accounting Purposes, Which of the Following Conditions Would Automatically