[sangtvo]

I’m just curious (without saying anything about my previous FAR take)… is “bargain purchase option” the same thing as “purchase option?” I’m trying to google it, but bargain purchase option keeps showing up. What do you guys think? If it is the same thing.. then I should have filled out the questionnaire (for confusing and wording of the answers) at the end of the test. -.-“

[komatk2]

From what I remember, a BPO means that you'd be buying it for less than market value. There could still be a purchase option that is > FMV

[vodrldnr]

They are different. Sometimes the two term are used to make you confused. Ignore “Purchase option”. Only Bargain purchase option is considered when calculating MLP and PV of MLP.

[Gary]

Depends on the wording of the question to be honest. I've come across a question studying which stated “the lessee has a purchase option at the end of the lease which will equal the FMV” which in that case, it is not a bargain purchase option.

AUD 8/18/16
FAR 11/16
BEC 1/17
REG 2/17

[Skynet]

I think of “Leases” in terms of Dating & Relationships.

Dating a woman is like an “Operating Lease” where all you have to record are expenses.

After dating the same woman and you are ready to take the plunge and is like a “Capital Lease” where you actually put a down payment which is the Diamond Ring and record both an Asset and A Liability : )

[Anonymous]

Those who said “bargain purchase option” means less than FMV have it right.

You pretty much always have a purchase option, as you can buy anything for the right price. A BARGAIN purchase option is an INCENTIVE to buy because it's a discount on what you'd pay for that asset if you bought it anywhere else. You know how the first rule of gun safety is to always assume a gun is loaded? Well, the first rule of bargain purchase options is to always assume they will be exercised.

Remember that this exam tests not just your knowledge but your confidence in your knowledge.

[Author]

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