Which of the following situations would normally lead to a lease being classified by the lessor as a finance lease?
(1 Mark)

Question

Which of the following situations would normally lead to a lease being classified by the lessor as a finance lease? 
 (1 Mark)

Accepted Answer

The lessee has the option to purchase the underlying asset at a price which makes it reasonably certain that this option will be exercised.

Answer

The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term.

Answer

The lease term is not for the major part of the underlying asset's economic life.

Answer

At the inception of the lease, the present value of the lease payments amounts to substantially less than the fair value of the underlying asset.

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