When using capital leases do we depreciate the asset by: 1. Using the life of the asset over the term of the lease, or 2. Using economic life of the asset. I was under the impression that we should always use the life over the term of the lease but the footnote in the book is not really clear: “Generally, depreciation methods used for similar purchased property are applied to leased assets over their estimated economic lives when one of the transfer of ownership criteria (1 or 2) is met and over the lease term when one of the other capitalization criteria (3 or 4) is satisfied”. pg.521 Can someone please confirm what is the standard to be used on the exam?