For a lease that contains a bargain purchase option, minimum lease payments include
A)any guarantee by the lessee of the residual value
B)any payments on failure to renew or extend the lease
C)executory costs
D)minimum periodic rental payments required by the lease over the lease term

Question

Quizplus · Accepted Answer

Minimum lease payments include the minimum periodic rental payments required by the lease over the lease term. The bargain purchase option allows the lessee to purchase the leased asset at a price significantly lower than its expected fair value at the end of the lease term. This option is considered a guaranteed residual value and is not included in the minimum lease payments. Executory costs and payments on failure to renew or extend the lease are not included in minimum lease payments either.

For a Lease That Contains a Bargain Purchase Option, Minimum