whenever a leasee can purchase the asset leased at the conclusion of the word. The price is lowver than fair market value. If noncancelable rent features this clause it is a capital rent.
Stipulation in a lease agreement that provides a lessee the right to purchase the rented asset after the rent term, at a high price significantly lower than its estimated fair market price at that moment. In accordance with the Financial Accounting Standards Board, if a non-cancelable rent has actually a bargain-purchase alternative, it must be classified as a capital lease.