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    What elements must be included in a lease in order for it to be considered a financial (capital) lease?

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    A capital lease must contain the following elements:

    - The leased asset is a capital asset and has a
    current market value (current cash purchase price)
    of $100,000 or more; and

    - The lease is non-cancelable; a lease is considered
    non-cancelable if it ceases to be in force:

    ? Only upon the occurrence of some remote
    contingency;

    ? Only with the permission of the lessor;

    ? Only if the lessee enters into a new lease with
    the same lessor; or

    ? Only upon payment by the lessee of a penalty in
    an amount such that continuation of the lease
    appears, as at inception, reasonably assured; and

    - The lease meets one or more of the following four
    criteria:

    ? the lease transfers ownership of the property
    to the University by the end of the lease term;

    ? the lease contains a bargain purchase option
    (all leases with a bargain purchase option for
    hospital, auxiliary, or service enterprises,
    where there is a likelihood that the option
    will be exercised, should be considered as
    capital leases);

    ? the lease is equal to ...

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    What elements must be included in a lease in order for it to be considered a financial (capital) lease?

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