In addition to the criteria that must be met by the lessee, the lessor must meet additional conditions for classification as a capital lease to satisfy the realization principle.

Question

Quizplus · Accepted Answer

This statement is true. The lessor must meet certain criteria, such as transferring ownership of the leased asset to the lessee by the end of the lease term, and ensuring that the lease term covers a substantial portion of the asset's economic life, in order for the lease to be classified as a capital lease according to the realization principle.

In Addition to the Criteria That Must Be Met by the Lessee