If the Lessee Expects to Obtain Title to Leased Property

question 125

Multiple Choice

If the lessee expects to obtain title to leased property due to a purchase option that is reasonably certain to be exercised or the passage of title at the end of the lease term:

• A) The lessee ignores any residual value for the leased property.
• B) The lessor ignores any residual value for the leased property.
• C) The lessee adds the present value of the residual value to the amount recorded for the lease.
• D) The lessor will always charge a higher annual lease rate.

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