Economics · Financial Management and Lease Financing
A specialized financial institution is structuring a complex cross-border lease for a high-value aviation asset where the lessee intends to utilize the equipment for its entire economic life, and the agreement stipulates that the present value of minimum lease payments significantly exceeds the fair market value of the asset at the inception of the contract. Additionally, the contract includes an option allowing the lessee to purchase the aircraft at a price expected to be sufficiently lower than the fair value. How should this transaction be classified under standard accounting practices for NBFCs?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Operating Lease
- 2Finance Lease✓
- 3Leveraged Lease
- 4Sales and Leaseback
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Finance Lease
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