Under ASC 842, a lease is classified as a finance lease if

Under ASC 842, a lease is classified as a finance lease if

 Under ASC 842, a lease is classified as a finance lease if:

A. The lease term is >75% of the asset's useful life

B. The present value of lease payments is >90% of the asset's fair value

C. The lease transfers ownership of the asset to the lessee

D. All of the above

Answer: D

Explanation: ASC 842-20-25-1 requires all four criteria (transfer of ownership, bargain purchase option, lease term >75% useful life, PV of payments >90% FV) for finance leases. All are valid.