Question:Lease A does not contain a bargain purchase option, but the lease term is equal to 90 percent of the estimated economic life of the leased property. Lease B does not transfer ownership of the property to the lessee by the end of the lease term, but the lease term is equal to 75 percent of the estimated economic life of the leased property. How should the lessee classify these leases.

Lease A                          Lease B 

A Operation lease               Capital lease 
B Operation lease               Operation lease 
C Capital lease                  Operation lease 
D Capital lease                  Capital lease 

+ Answer
D 

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Md. Saydul Alam

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