CPA- FAR: Classification Mnemonic for Leases

Question

Classification Mnemonic for Leases

LandiniLizard · Accepted Answer

OWNES PC
O= Ownership Transfer
W= Written Purchase Option
N= Net Present Value + Residual Value >= 90% of Asset's FV
E= Economic Life >= 75%
S= Specialized (No Alt) Use
P= PV Sum of Lease Payments (excl. res value) >= Asset's FV
C= Collection of Payments is Probable

CPA- FAR

Classification Mnemonic for Leases

OWNES PC O= Ownership Transfer W= Written Purchase Option N= Net Present Value + Residual Value >= 90% of Asset's FV E= Economic Life >= 75% S= Specialized (No Alt) Use P= PV Sum of Lease Payments (excl. res value) >= Asset's FV C= Collection of Payments is Probable

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