The following are indicators in the terms of a lease that cause it to be treated as a capital lease. The indicators are:

These indicators are criteria that trigger lease capitalization under

Question

The following are indicators in the terms of a lease that cause it to be treated as a capital lease. The indicators are:

These indicators are criteria that trigger lease capitalization under

Quizplus · Accepted Answer

The criteria that trigger lease capitalization under ASC 840 are: 
I. The lease transfers ownership of the property to the lessee by the end of the lease term.
II. The lease contains a bargain purchase option.
III. The lease term is equal to 75% or more of the estimated economic life of the property.
IV. The present value of the minimum lease payments (excluding executory costs) equals or exceeds 90% of the fair value of the property. 
In this case, the only option that includes criteria from the ASC 840 is option C, which contains criterion III.

The Following Are Indicators in the Terms of a Lease