Which of the following is a characteristic of a capital lease?

A capital lease is typically characterized by longer durations and often includes a purchase option at the end of the lease term, making it similar to an ownership arrangement. The lease agreements are generally structured to cover a significant portion of the asset's useful life, and the option to purchase the asset at a predetermined price is a key feature. This aligns with the nature of a capital lease, where the lessee essentially assumes the benefits and risks of ownership, which is reflected in the longer duration of the lease.

Long-term commitments help build equity in the asset, which is a crucial reason why this type of lease is favored when the intent is to gain ownership awareness over time, contrasting with operating leases that are more short-term and do not often offer a purchase option. This characteristic resonates with businesses looking to utilize equipment or property over an extended period while securing the rights to purchase these assets eventually.