Which statement is correct about the bargain purchase option (BPO)?
A) It is cash that the lessee will receive at the end of the lease.
B) It cannot be assumed that the BPO will be exercised.
C) It is excluded in the minimum lease payment calculation.
D) It means that it is almost certain that ownership will transfer to the lessee.

Question

Quizplus · Accepted Answer

The bargain purchase option (BPO) means that it is almost certain that ownership will transfer to the lessee. Option A is incorrect because the lessee does not receive cash at the end of the lease, but rather the option to purchase the asset at a bargain price. Option B is partially correct in that it cannot be assumed that the BPO will be exercised, but this does not mean that the BPO itself is excluded from the minimum lease payment calculation, as stated in option C.

Which Statement Is Correct About the Bargain Purchase Option (BPO)