Question

Which of the following is not a criterion for a lease to be recorded as a...

Which of the following is not a criterion for a lease to be recorded as a finance lease?

a.There is a bargain purchase option.

b. There is transfer of ownership of the asset.

c. The lease is non-cancelable.

d. Lease payments are fixed over the lease term, there are no variable lease payments.

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Answer #1

Answer will be :-

Option( D)

Lease payment are fixed over lease term, there are no Variable lease payments is not a criteria to be classified as Finance lease.

Because the lease term is for a significant part of the asset’s useful economic life and the  present value of future lease payments amounts to be substantially all of the asset’s fair value.

Explaination:-

As all other three option are the criterion to be classified as Finance lease which are :

Option (A)There is bargain purchase option

Option (B) There is transfer of ownership of the asset

Option (C) The lease is non cancelable

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