CPA FAR Practice Questions - AICPA CPA Exam - Financial Accounting & Reporting (FAR) Exam

Under ASC 842, a lessee classifies a lease as a finance lease if any of the following criteria are met EXCEPT:

The lease transfers ownership of the asset to the lessee The lease grants a purchase option the lessee is reasonably certain to exercise The lease term is for the major part of the asset's remaining economic life The lessee has the option to extend the lease for one additional year

Correct Answer:

The lessee has the option to extend the lease for one additional year

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