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  • the lease term is greater than 75% of the asset's estimated economic life

  • the lease contains an option for the Lessee to purchase the asset for less than fair market value

  • ownership of the asset is transferred to the lessee at the end of the lease term

  • the value of the lease payments exceeds 90% of the fair market value of the asset.


From an Accounting point of view, such a lease is classified as a ''purchase by the lessee'' and appears on the lessee's Balance Sheet .


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