If a lease agreement contains a bargain purchase option,the lessee must depreciate the leased asset over the asset's useful life rather than over the lease term.

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A bargain purchase option in a lease agreement indicates that the lessee intends to purchase the asset at the end of the lease term for a price expected to be significantly lower than the fair value at the date the option becomes exercisable. Therefore, accounting standards require the lessee to depreciate the leased asset over its useful life, reflecting the lessee's assumption of ownership and the benefits the lessee expects to receive over the asset's useful life.

If a Lease Agreement Contains a Bargain Purchase Option,the Lessee