This video shows how the lessee accounts for a bargain purchase option when capitalizing a lease. The present value of the bargain purchase option price is added to the lease liability. The bargain purchase option is then treated as a final payment at the end of the lease. Also, the lessee must amortize the leased asset over the asset’s economic life, not the lease term, since it is expected that the lessee will exercise the bargain purchase option at the end of the lease.