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A lease is a capital lease if:

June 10, 2012
  • The title is transfered to the lessee at the end of the lease period.
  • A bargain purchase option exists.
  • The lease period is at least 75% of the asset’s life.
  • The present value of the lease payments is at least 90% of the fair value of the asset.

Otherwise it is an operating lease not a capital lease.

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