A lease agreement contains a clause that gives the tenant the right to purchase the property at a specified price. This type of

Question

Viktor [21]

3 years ago

12

A lease agreement contains a clause that gives the tenant the right to purchase the property at a specified price. This type of

agreement is called a

Business

1 answer:

Anni [7] · Answer 1 · 2022-08-24T21:46:38+03:00

Answer: Finance Lease

Explanation:

There are two main types of leases which are operating leases and finance leases. Operating leases work much like an asset being rented so no ownership is passed from the person leasing to the leasee.

When it comes to finance leases however, the person leasing treats the asset as if it is their own. They record depreciation and list it as an asset in their balance sheets. At the end of the lease term, the leasee then has the option to purchase the asset.