Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease...
Under U.S. GAAP, which of the following items would require a lessee to classify a lease of equipment as a capital lease?
| a. |
The lease term is 90% of the estimated economic life of the lease property. |
|
| b. |
The lease does not contain a bargain purchase option. |
|
| c. |
The present value of the contractual minimum lease payments is 75% of the fair value of the leased property. |
|
| d. |
There is no transfer of ownership to the lessee at the end of the lease term |
Homework Answers
| Option A | |
|
When the term of lease is 90% or more of the estimated economic life of the equipment which was leased, the lessee should classify such equipment as a capital lease under the US GAAP. Comment if you face any issues |
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