Which One of These Conditions Must Be Met for a Lease

question 151

Multiple Choice

Which one of these conditions must be met for a lease to qualify as a capital lease?

• A) The lease contains a bargain purchase price at the end of the lease.
• B) The lease term is equal to 70% or more of the estimated life of the leased property.
• C) The present value of the minimum lease payments equals 80% or more of the fair value of the leased property at the inception of the lease.
• D) Management classifies the lease as operating.

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