This ASC 840/IAS 17 example shows a 3-year copier lease at $115 per month, with $16 for maintenance, an 8.5% borrowing rate, and a $500 end-of-term purchase option. The present value of rent, excluding maintenance, is $3,158.35, exceeding 90% of the asset’s $3,500 fair value, classifying it as a capital lease. Journal entries record the right-of-use asset, liabilities, rent payments, interest, and amortization, with obligations reclassified monthly. At lease end or early termination, the asset and obligation are removed, recognizing any gain or loss. EZLease setup instructions ensure accurate classification and compliance.

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