A Noncancelable Lease Should Be Recorded as a Capital Lease

question 41

Multiple Choice

A noncancelable lease should be recorded as a capital lease if

• A) The present value of the lease payments is 75% or more of the fair market value of the leased asset
• B) Title to the asset transfers to the lessee by the end of the lease term
• C) The lessee is given an option to purchase the asset at its fair market value
• D) Any one of these criterion are met

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Definitions:

Net Sales

The total revenue from sales of goods or services minus returns, allowances, and discounts.