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

question 69

Multiple Choice

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.

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Definitions:

Assets

Assets refer to resources owned by a company that have economic value and can be used to meet debts, commitments, or investments.

Retained Earnings

The portion of a company's profits not distributed as dividends to shareholders, but instead reinvested in the business or held as reserves.

Assets

Assets are resources owned by a business or individual, which provide economic value or are expected to generate future benefit.

Revenues

The income generated from normal business operations and includes discounts and deductions for returned merchandise.