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Financial Accounting MCQs

Under FASB 13, to qualify as a capital lease and not an operating lease, which of the following is true?

The lease term equals 20% or more of the estimated economic life of the property.

The lease can only include real estate.

The present value of the minimum lease payments at the beginning of the lease term equals or exceeds 50% of the fair market value of the property.

Capital leases do not exist, all leases are accounted for in the same manner on the balance sheet.

The lease must contain a bargain purchase option.

Answer

Correct Answer: The lease must contain a bargain purchase option.

Explanation:

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