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Basic Question 6 of 8
A sufficient criterion for classification as a capital lease by a lessee is that the present value of the minimum lease payments is equal to 75% or more of the fair value of the leased asset. True or False?
User Contributed Comments 3
| User | Comment |
|---|---|
| isida | minimum lease payments must be equal to or greater than 90% of the value of the asset; lease period must be 75% or greater than the estimated life of asset |
| Sp1993 | Do not mix up this classification criteria (75% of asset's economic life) with whether lease payments PV equals or exceeds 90% of the asset's fair market value |
| assiduous | This is specifically under US GAAP rules |
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Learning Outcome Statements
explain the financial reporting of leases from the perspectives of lessors and lessees
CFA® 2024 Level I Curriculum, Volume 2, Module 8.