Bargain Purchase Option

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Dictionary Says

Definition of 'Bargain Purchase Option'

An option in a lease agreement that allows the lessee to purchase the leased asset at the end of the lease period at a price substantially below its fair market value. The bargain purchase option is one of four criteria, any one of which, if satisfied, would require the lease to be classified as a capital or financing lease that must be disclosed on the lessee's balance sheet. The objective of this classification is to prevent "off-balance sheet" financing by the lessee.
Investopedia Says

Investopedia explains 'Bargain Purchase Option'

For example, assume that the value of an asset at the end of the lease period is estimated at $100,000, but the lease agreement has an option that enables the lessee to purchase it for $70,000. This would be considered as a bargain purchase option and would require the lessee to treat the lease as a capital lease.

There are significant differences in the accounting treatment of the leased asset and lease payments for capital leases and operating leases.  

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'Bargain Purchase Option'

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    ... lease would be treated as a capital lease if one of the following criteria is met:
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    ... the next three months, so you purchase a six ... (To learn more, read Understanding Option
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    ... If you go with the payment for chores option, make a clear list ... Shopping for a Bargain
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    ... If you purchase the item after the deadline, there's no ... Sorry, No Returns Once a
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  • Don't Read Too Much Into Schwab's Acquisition

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    ... In other regards though, it was a smart purchase at a palatable price. ... Options trading
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  • Pin Down Stock Price With Real Options

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    ... The only problem is that the owners' bargain offer has ... is where the concept of a
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