If a lessee has the option to buy the leased asset at less than fair market value at any time in the leasing period, including at the end of the lease, then the lease is a financial lease.

Question

Quizplus · Accepted Answer

This is because a financial lease is one where the lessee has a purchase option at less than fair market value, which essentially gives them ownership of the asset at the end of the lease term.

If a Lessee Has the Option to Buy the Leased