In Order for a Lessee to Capitalize a Lease, at Least

question 37

Essay

In order for a lessee to capitalize a lease, at least one of four criteria must be met.Answer the following questions about the third criterion, the one having to do with the useful life of the leased asset.
(a)State the criterion itself, specifically.
(b)Why does fulfilling this criterion imply a capitalized lease (i.e.why is this one of the criteria)?
(c)When is this criterion not applicable (i.e.when can it not be used to test whether a lease should b capitalized)?

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Definitions:

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