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.

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Definitions:

Codicil

A written supplement or modification to a will. A codicil must be executed with the same formalities as a will.

Per Capita

A statistical measure that divides an aggregate amount by the number of units or individuals to determine the average amount per person.

Lineal Heirs

Direct descendants of an individual, such as children, grandchildren, and so forth, who may inherit from an estate.

Collateral Heirs

Individuals entitled to inherit a deceased person's estate in the absence of direct descendants or other primary beneficiaries, often including distant relatives.