CumChan Is a Financial Services Firm

question 59

Multiple Choice

CumChan is a financial services firm.They need computer equipment and have decided to lease the equipment with an operating lease.They want to prevent additional debt from showing up on their balance sheet.Which of the following must be true about their lease for this to work?

• A) the lease term is equal to 65% or more of the economic life of the leased property.
• B) the present value of the minimum lease payments is equal to 75% or more of the fair value of the leased property at the inception of the lease.
• C) the present value of the minimum lease payments is equal to 90% or more of the fair value of the leased property at the inception of the lease.
• D) the lease term is equal to 90% or more of the economic life of the leased property.

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