A lessee's option to purchase a leased asset at a price that is substantially lower than the asset's fair value is referred to as a ________.
A)bargain purchase option
B)guaranteed purchase option
C)early purchase option
D)residual purchase option

Question

Quizplus · Accepted Answer

A bargain purchase option allows the lessee to purchase an asset at a price significantly lower than the asset's fair value. This option is often included in leases of assets with a high degree of residual value, such as equipment and vehicles, and provides an attractive opportunity for the lessee to acquire ownership of the asset at a lower cost than would otherwise be possible. The other options listed are not commonly used in lease agreements.

A Lessee's Option to Purchase a Leased Asset at a Price