The four criteria provided in GAAP for distinguishing a capital lease from an operating lease do not include:
A)The agreement specifies that ownership transfers at the end of the lease term.
B)The collectibility of the lease payments must be reasonably predictable.
C)The agreement contains a bargain purchase option.
D)The noncancelable lease term is 75% or more of the useful life of the leased asset.

Question

Quizplus · Accepted Answer

The collectibility of the lease payments being reasonably predictable is not one of the four criteria under GAAP for distinguishing a capital lease from an operating lease. The criteria include ownership transfer, bargain purchase option, lease term, and present value of payments.

The Four Criteria Provided in GAAP for Distinguishing a Capital