QUESTION 12 Question: What impact does a bargain purchase option have on the present value of the minimum lease payments computed by the lessee? 1. The lessee must increase the present value of the minimum lease payments by the present value of the bargain purchase option price. 2. No impact as the option does not enter into the transaction until the end of the lease term The lessee must decrease the present value of the minimum lease payments by the present value of the option price. 4. The minimum lease payments would be increased by the present value of the option price if, at the time of the lease agreement, it appeared certain that the lessee would exercise the option at the end of the lease and purchase the asset at the option price QUESTION 13 Question: In computing the present value of the minimum lease payments, the lessor should use ita incremental borrowing rate in all cases 2 none of these 3 use other its implicit rate or the rate of the lessee, whichever is lower, assuming that the rate is known to the lessor 4. use other its incremental borrowing rate or the rate of the lessee, whichever is higher, assuming that the rate is known to the lesson