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What are the five criterial for classification as a finance

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Problem 1: Trelim Inc. leased standard equipment to Carz Corporation with a lease period of 8 years. At the end of the lease Trelim is to have possession of the equipment. Trelim paid $16,000 for the equipment. The useful life of the equipment is 12 years. The normal sale price of the equipment is $22,500. The present value of the lease payments for the lessor and lessee is $20,500. The first payment was made the day the lease was signed. What are the five criterial for classification as a finance lease? Can Carz classify this as a finance lease? If yes, which criteria it met for a finance lease?

Reference no: EM132830528

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