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A non-cancelable lease has a term of 6 years and the leased asset has an economic life of 12 years. The present value of the
A non-cancelable lease has a term of 6 years and the leased asset has an economic life of 12 years. The present value of the lease for the lessee is $400,000 and the fair value of the asset is $1 million. The asset reverts back to the lessor at the end of the lease term and can be deployed by the lessor for other uses. This lease should most likely be accounted for by the lessee as:
Finance lease due to the lease term
Operating lease
Finance lease due to the alternative use test
Finance lease due to a transfer of ownership
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