A leased asset under a finance lease should be amortised over the asset's expected useful life if there is a bargain purchase option in the lease agreement.

Question

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According to IAS 17, if a lease agreement includes a bargain purchase option, it is presumed that the lessee will exercise that option. Therefore, the leased asset should be treated as if it were owned by the lessee and amortized over the asset's expected useful life.

A Leased Asset Under a Finance Lease Should Be Amortised