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21 November, 07:58

One of the five criteria for a finance lease specifies that the present value of the lease payments be equal to or greater than:

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  1. 21 November, 08:02
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    Answer: the fair value of the asset should be greater than or equal to 90%

    The fair value of a leasee's asset is an important criterion in the decision making of whether to approve a finance lease. Leasee's term of payment should also be greater than 75% of the economic life of the property being leased.
  2. 21 November, 08:13
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    One of the five criteria for a finance lease specifies that the present value of the lease payments be equal to or greater than the fair value of the asset should be greater than or equal to 90%. A leased asset is also known as a capital or sales lease. This type of lease is where the finance company actually owns the asset during the entire time of the lease. However, the lessee has total operating control and has a part of the risks and returns from the asset.
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