Leases are recorded as capital equipment when the lease agreement is greater than $50,000 and one or more of the following criteria are met:
- The lease transfers ownership of the property to Michigan Tech by the end of the lease term.
- The lease contains a purchase option.
- The lease term is equal to 75% or more of the estimated economic life of the leased property.
- The present value of the minimum lease payments equals or exceeds 90% of the fair market value of the leased property.
If the lease does not meet any of the above criteria, the university recognizes the expense as the lease payments are made.