A is corrent. Per ASC Topic 840, minimum lease payments include the rental payments plus the amount of the bargain purchase option if it exists. The amount to be capitalized is the present value of the minimum lease payments. Therefore, the present value of the bargain purchase option would be added to the present value of the rental payments (assumed to be previously calculated) in determining the lessee’s capitalizable cost.
B is incorrect. Per ASC Topic 840, minimum lease payments include the rental payments plus the amount of the bargain purchase option if it exists. The amount to be capitalized is the present value of the minimum lease payments. Therefore, the present value of the bargain purchase option would be added to the present value of the rental payments (assumed to be previously calculated) in determining the lessee’s capitalizable cost.
B is incorrect. Per ASC Topic 840, minimum lease payments include the rental payments plus the amount of the bargain purchase option if it exists. The amount to be capitalized is the present value of the minimum lease payments. Therefore, the present value of the bargain purchase option would be added to the present value of the rental payments (assumed to be previously calculated) in determining the lessee’s capitalizable cost.
D is incorrect. Per ASC Topic 840, minimum lease payments include the rental payments plus the amount of the bargain purchase option if it exists. The amount to be capitalized is the present value of the minimum lease payments. Therefore, the present value of the bargain purchase option would be added to the present value of the rental payments (assumed to be previously calculated) in determining the lessee’s capitalizable cost.
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