C is corrent. A lease that transfers ownership of the property to the lessee by the end of the lease term and a lease that contains a bargain purchase option are properly classified as capital leases. Per ASC Topic 840, if the lease meets either of the above criteria, the asset should be amortized in a manner consistent with the lessee’s normal depreciation policy for owned assets because the asset will be used by the lessee for its entire life.
A is incorrect. A lease that transfers ownership of the property to the lessee by the end of the lease term and a lease that contains a bargain purchase option are properly classified as capital leases. Per ASC Topic 840, if the lease meets either of the above criteria, the asset should be amortized in a manner consistent with the lessee’s normal depreciation policy for owned assets because the asset will be used by the lessee for its entire life.
B is incorrect. A lease that transfers ownership of the property to the lessee by the end of the lease term and a lease that contains a bargain purchase option are properly classified as capital leases. Per ASC Topic 840, if the lease meets either of the above criteria, the asset should be amortized in a manner consistent with the lessee’s normal depreciation policy for owned assets because the asset will be used by the lessee for its entire life.
D is incorrect. A lease that transfers ownership of the property to the lessee by the end of the lease term and a lease that contains a bargain purchase option are properly classified as capital leases. Per ASC Topic 840, if the lease meets either of the above criteria, the asset should be amortized in a manner consistent with the lessee’s normal depreciation policy for owned assets because the asset will be used by the lessee for its entire life.
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