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What elements must be included in a lease in order for it

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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