If a Non-Cancellable Lease Contains a Bargain Purchase Option, the Lessee

question 7

Multiple Choice

If a non-cancellable lease contains a bargain purchase option, the lessee is expected to be able to pay all future rents, and the lessor is expected to incur unreimbursable costs during the lease term, the lessee and lessor should classify the lease as $\begin{array}{lll}&\text { Lessee}&\text { Lessor }\\ \text { I. } & \text { operating } & \text { operating } \\\text { II. } & \text { operating } & \text { capital } \\\text { III. } & \text { capital } & \text { capital } \\\text { IV. } & \text { capital } & \text { operating }\end{array}$

• A)I
• B)II
• C)III
• D)IV

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