The term 'bargain purchase option' is not used explicitly in AASB 117 but is described as:
A) the option to purchase the leased asset for significantly less than its cost at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised.
B) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised.
C) being in place when the lessee is guaranteed to undertake the option at the end of the lease.
D) the option to purchase the asset at a price that is expected to be sufficiently lower that the fair value at the date the option becomes exercisable, for it to be reasonably certain at the inception of the lease, that the option will be exercised and being in place when the lessee is guaranteed to undertake the option at the end of the lease.

Question

Quizplus · Accepted Answer

The correct description of a 'bargain purchase option' in the context of AASB 117 is an option to purchase the leased asset at a price expected to be significantly lower than its fair value at the date the option becomes exercisable, with a reasonable certainty at the inception of the lease that the option will be exercised. This definition emphasizes the financial advantage and the lessee's intention regarding the exercise of the option, without implying a guarantee of exercise as in some other choices.

The Term 'Bargain Purchase Option' Is Not Used Explicitly in AASB