The lessee's option to purchase a leased asset at a price that is sufficiently lower than the asset's expected fair value so that the exercise of the option appears reasonably certain sometimes is called a:
A) Bargain purchase option.
B) Lessee buy-out option.
C) Lessor sell-out option.
D) Guaranteed purchase option.

Question

Quizplus · Accepted Answer

The option described is referred to as a bargain purchase option because it allows the lessee to purchase the leased asset at a price that is significantly lower than its expected fair value, providing a bargain.

The Lessee's Option to Purchase a Leased Asset at a Price