Which statement is correct about the bargain purchase option (BPO)?
A)It is cash that the lessee will receive at the end of the lease.
B)It cannot be assumed that the BPO will be exercised.
C)It is excluded in the present value of the lease payment calculation.
D)It means that it is almost certain that ownership will transfer to the lessee.

Question

Quizplus · Accepted Answer

The bargain purchase option (BPO) implies that it is almost certain that ownership of the leased asset will transfer to the lessee at the end of the lease term, often because the option price is significantly lower than the expected fair market value of the asset at that time.

Which Statement Is Correct About the Bargain Purchase Option (BPO)