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 assured 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 term described in the question is a bargain purchase option, which allows the lessee to purchase the leased asset at a price significantly lower than its expected fair value. This option is attractive to lessees as it offers them the opportunity to acquire the asset at a bargain price, making it more likely that they will exercise the option.

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