Question

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

a. there is transfer of ownership.
b. there is a bargain purchase option
c. the lease is cancelable
d. the lease term is at lease 75% of the asset's useful life

Answer 1

A lease does not need to have transfer of ownership to be considered a capital lease.

Step-by-step explanation:

The criterion that is not required for a lease to be recorded as a capital lease is a. there is transfer of ownership. Transfer of ownership is not necessary for a lease to be classified as a capital lease. The other criteria for a lease to be considered a capital lease are: b. there is a bargain purchase option, c. the lease is cancelable, and d. the lease term is at least 75% of the asset's useful life.