- CFA Exams
- CFA Exam: Level I 2021
- Study Session 8. Financial Reporting and Analysis (3)
- Reading 28. Non-current (Long-term) Liabilities
- Subject 7. Lease Classification
CFA Practice Question
A sufficient criterion for classification as a capital lease by a lessee is that the present value of the minimum lease payments is equal to 75% or more of the fair value of the leased asset. True or False?
Correct Answer: False
User Contributed Comments 3
| User | Comment |
|---|---|
| isida | minimum lease payments must be equal to or greater than 90% of the value of the asset; lease period must be 75% or greater than the estimated life of asset |
| Sp1993 | Do not mix up this classification criteria (75% of asset's economic life) with whether lease payments PV equals or exceeds 90% of the asset's fair market value |
| assiduous | This is specifically under US GAAP rules |