Judgment Cases Judgment Case 1: Comparison of Lease Classification Rules se les discussed in this chanter have an elective date for fiscal years beginning er en 13.08. Under US GAAP the classification miles that were effective before that date are a t erem Specifically, the Group I rules were as follows: The lease transfers ownership of the property to the lessee at the end of the lease em 2. The lease contains a bargain purchase option, which allows the lessee to acquire the property at a price specified at the inception of the lease that is substantially lower than the expected fair market value of the property at the date the option can be exercised. 3. The lease term is greater than or equal to 75% of the estimated economic life of the property The present value of the minimum lease payments is greater than or equal to 90% of the fair market value of the property at the inception of the lease. Required Compare and contrast the old rules to the new rules Which set of rules require the most judgment? What are the advantages and disadvantages of the old classification rules versus the new classification Which do you prefer? Explain your answer Iudament Case 2: Lease Classification Judgment Cases Judgment Case 1: Comparison of Lease Classification Rules se les discussed in this chanter have an elective date for fiscal years beginning er en 13.08. Under US GAAP the classification miles that were effective before that date are a t erem Specifically, the Group I rules were as follows: The lease transfers ownership of the property to the lessee at the end of the lease em 2. The lease contains a bargain purchase option, which allows the lessee to acquire the property at a price specified at the inception of the lease that is substantially lower than the expected fair market value of the property at the date the option can be exercised. 3. The lease term is greater than or equal to 75% of the estimated economic life of the property The present value of the minimum lease payments is greater than or equal to 90% of the fair market value of the property at the inception of the lease. Required Compare and contrast the old rules to the new rules Which set of rules require the most judgment? What are the advantages and disadvantages of the old classification rules versus the new classification Which do you prefer? Explain your answer Iudament Case 2: Lease Classification