Asked by
Rondel Hemerding
on Dec 08, 2024Verified
If the lease term is at least 70% of the estimated economic life of the asset, this would cause a lease to be declared a capital lease for accounting purposes.
Economic Life
Refers to the duration over which an asset remains productive or useful for its intended purpose.
Capital Lease
A lease agreement that is considered a purchase of an asset for accounting purposes, because it transfers substantially all the risks and rewards of ownership.
- Identify the criteria that must be met for a lease to be categorized as a capital lease for accounting purposes.
Verified Answer
KM
Learning Objectives
- Identify the criteria that must be met for a lease to be categorized as a capital lease for accounting purposes.
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