When a Lease Contract Does Not Transfer Title to the Lessee

Multiple Choice

When a lease contract does not transfer title to the lessee, there is no purchase option reasonably certain to be exercised, and the lease term is not the major part of the asset's remaining economic life

A) The lessee must classify the lease as an operating lease.
B) The amount of unguaranteed salvage value, if any, determines whether the lease is a finance lease or an operating lease.
C) The interest rate used to determine the present value of the minimum lease payments also determines whether the lease is a finance lease or an operating lease.
D) The lessee must use the greater of the lessor's rate of return or the lessee's incremental borrowing rate to determine whether the lease is a finance lease or an operating lease.