CERTYNEX IFRS ACADEMY

Which of the following situations would normally, individually or in combination, lead the lessor to classify a lease as a finance lease?

Ownership of the asset is transferred to the lessee by the end of the lease term.

Payments are due monthly, in advance.

The lessee has an option to purchase at a price so low compared with the expected fair value that its exercise is reasonably certain at the inception date.

The contract is legally titled operating lease agreement.

The asset is so specialised that only the lessee can use it without major modifications.