90% / 75% / Transfer Lease Tests

What It Stands For

90% of economic life, 75% of fair value, Transfer of ownership, Bargain purchase option

TopicLease Classification
Why It MattersUnder ASC 842, a lease is classified as a finance lease (lessee) if it meets any one of five criteria. The 90% life test and 75% value test (from old ASC 840) remain common quantitative thresholds.

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