Bargain purchase option
Star Company (a private company that reports under ASPE) leases a piece of equipment for $ 2,500 per month for 30 months with an option to purchase the equipment for $ 10,000 at the end of the 30-month period. If the equipment's estimated fair market value is $ 40,000 at the end of the 30 months, is this considered a bargain purchase option? Why?

Question

Quizplus · Accepted Answer

The Answer of Bargain purchase option
Star Company (a private company that reports under ASPE) leases a piece of equipment for $ 2,500 per month for 30 months with an option to purchase the equipment for $ 10,000 at the end of the 30-month period. If the equipment's estimated fair market value is $ 40,000 at the end of the 30 months, is this considered a bargain purchase option? Why?

Bargain Purchase Option Star Company (A Private Company That Reports Under ASPE) Leases