The Lessee Should Classify a Non-Cancellable Long-Term Lease as a Capital

question 45

Multiple Choice

The lessee should classify a non-cancellable long-term lease as a capital lease if

• A)there is a purchase option at the end of the lease term
• B)the present value of the minimum lease payments is at least 75% of the fair value of the leased property
• C)the present value of the minimum lease payments is at least 90% of the fair market value of the leased property to the lessor
• D)the estimated residual value of the leased property at the termination of the lease is equal to 90% of the lessee's guaranteed residual value

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Definitions:

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