Which of the Following Lease Criteria Would Not Qualify a Lease

question 3

Multiple Choice

Which of the following lease criteria would not qualify a lease as a capital lease?

• A) The lease transfers ownership of the property to the lessee by the end of the lease term.
• B) The lease contains an option to purchase the leased property at its fair market value.
• C) The lease term is equal to or greater than 75% of the estimated economic life of the leased property.
• D) The present value of the minimum lease payments equals or exceeds 90% of the fair value of the leased property.

---

Definitions:

Opportunity Cost

The relinquishment of potential profits available from other avenues when one option is picked.

Machinery

The machines, equipment, and devices that are used in a variety of industries to increase efficiency in the production of goods or services.

United States

A country in North America comprising 50 states, known for its significant economic and political influence globally.

Mexico

A country located in the southern portion of North America, known for its rich cultural heritage, diverse landscapes, and vibrant cuisine.