Which of the Following Conditions Will NOT Cause a Lease

question 3

Multiple Choice

Which of the following conditions will NOT cause a lease to be categorized as a capital lease?

• A)It extends for at least 90 percent of the asset's life
• B)It transfers ownership to the lessee at the end of the lease term
• C)It seems likely that ownership will be transferred to the lessee at the end of the lease term because of a "bargain purchase" option
• D)The present value of the contractual lease payments equals or exceeds 90 percent of the fair market value of the asset at the time the lease is signed