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    How should the lessee classify these leases

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    Lease A does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases?

    Lease A Lease B

    A. Operating Lease Capital Lease
    B. Operating Lease Operating Lease
    C. Capital Lease Capital Lease
    D. Capital Lease Operating Lease

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    https://brainmass.com/business/leasing/how-should-lessee-classify-leases-241695

    Solution Preview

    The lease is an operating lease to the lessee and lessor if all the four criteria is satisfied for the lease
    1. it does not transfer ...

    Solution Summary

    How the lessee classifies leases is examined. The bargaining options for each lease is determined.

    $2.49

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