A lease contains a bargain purchase option. In determining the lessee’s capitalizable cost at the beginning of the lease term, the payment called for by the bargain purchase option would
A. Be added to the residual value.
B. Not be capitalized
C. Be subtracted at its present value.
D. Be added at its present value.
Answer:D
A lease contains a bargain purchase option. In determining the lessee’s capitalizable cost at the beginning of the lease term, the payment called for by the bargain purchase option would
A. Be added to the residual value. B. Not be capitalized C. Be subtracted at its present value. D. Be added at its present value.