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Which of the following is a criterion for classifying a lease as a finance lease by the lessee?

Which of the following is a criterion for classifying a lease as a finance lease by the lessee?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Which of the following is a criterion for classifying a lease as a finance lease by the lessee? OA. The lease term is equal to 75% or more of the estimated economic life of the leased property. OB. The present value of the minimum lease payments is 75% or more of the fair value of the leased property. OC. The lease agreement contains an option to purchase the leased property at its fair value at the end of the lease term. OD. The lease agreement requires that title of the leased property remains with the lessor at the end of thelease term.
Transcribed Image Text:Which of the following is a criterion for classifying a lease as a finance lease by the lessee? OA. The lease term is equal to 75% or more of the estimated economic life of the leased property. OB. The present value of the minimum lease payments is 75% or more of the fair value of the leased property. OC. The lease agreement contains an option to purchase the leased property at its fair value at the end of the lease term. OD. The lease agreement requires that title of the leased property remains with the lessor at the end of thelease term.
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