Lease Terms
BPO--Bargain purchase option
- The purchase price on an asset offered to lessee after a predetermined period of time. Text assumes BPO at the end lease.
- It is significantly below fair market value to the point that exercise of the option is virtually assured.
Rental payments
- May be a constant amount or it may vary over time
- May be related to several factors
Noncancelable
- Cancelable only upon the outcome of a remote contingency or tha the cancellation probably will not occur.
- Only noncancelable leases may be capitalized.