Which of the following is true if a lease includes both a bargain purchase option and a residual value?
A) The bargain purchase option takes precedence in all computations.
B) The lessee will depreciate the property over the life of the lease without considering the bargain purchase option.
C) The lessee adds the present value of the residual value to the amount recorded for the lease.
D) The lessee subtracts the present value of the bargain purchase option from the present value of the minimum lease payments.

Question

Quizplus · Accepted Answer

The bargain purchase option takes precedence because it indicates that the lessee is likely to purchase the asset, affecting the lease classification and accounting treatment.

Which of the Following Is True If a Lease Includes