Which of the following statements that classify a lease as a finance lease under U.S. GAAP is least accurate?
A) Title is transferred at the end of the lease period.
B) A bargain purchase option exists.
C) The present value of the lease payments is at least 80% of the fair market value of the asset.
solution:C
For a lease to be classified as a finance (capital) lease the present value of the lease payments must be at least 90% of the fair market value of the asset.