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Bargain Purchase Option
An option in a lease agreement that allows the lessee to purchase the leased asset at a price significantly below its fair market value.
Capital Lease
A lease agreement that is classified as a purchase by the lessee for accounting purposes because it meets certain criteria, such as transfer of ownership by the end of the lease term.
Operating Lease
A lease agreement for property or equipment that is considered a rental and is not recorded as an asset on the company's balance sheet.
GAAP
Generally Accepted Accounting Principles, a collection of commonly followed accounting rules and standards for financial reporting in the United States.
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