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

question 44

Multiple Choice

The term 'bargain purchase option' is not used explicitly in IAS 17 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.

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Definitions:

Neanderthals

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Coexisted

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Darwin

Charles Darwin, a 19th-century naturalist known for his contributions to the science of evolution and the theory of natural selection.

Billion Years

A time span equivalent to 1,000 million years, often used in the context of Earth's age or the time span of cosmic events.