C

The question states that the present value of the minimum lease payments exceeds 90% of the fair value

of the machine, and also give information that the lease term is equal to or greater than 75% of the

estimated life of the asset (15/17 = 88%). The criteria to classify and account for the lease as a capital

lease is that at the date of the lease agreement (date of lease inception), the lease must satisfy at least one

of the following four criteria: The lease transfers ownership of the property to the lessee by the end of

the lease; the lease contains a bargain purchase option; the lease term is equal to 75% or more of the

estimated economic life of the leased property (as determined at the inception of the lease); or the

present value of the minimum lease payments (excluding executory costs) equals or exceeds 90% of the

fair value of the leased property at lease inception. Even though there is no transfer of ownership, the

lease meets two of the four criteria to be classified as a capital lease.

My question is even the collectibility is not predicatable, can it still be classified as capital lease?

Can anybody kindly let me know where  I understand  it wrong? Thanks.