Which is an example of a lease that allows the lessee to purchase the equipment at a nominal amount?

• A. A lease intended as security.
• B. A standard operating lease with no purchase option.
• C. A rental agreement for maintenance.
• D. A lease with transfer of ownership at end for a premium.

Answer: (A)

This item tests recognizing a financing-style lease feature: an option to buy the asset for a nominal amount at the end of the term. A lease intended as security is structured to support a loan, with the lessor retaining title as security and the lessee often having a path to ownership for a very small price. That nominal purchase option is a hallmark of a financing-type arrangement, not a true operating lease.

In contrast, a standard operating lease typically has no purchase option, a maintenance rental is not a lease of the asset itself, and a lease that ends with ownership for a premium implies exercising ownership at a high price rather than a nominal one. Therefore, the lease intended as security best fits the scenario of allowing purchase at a nominal amount.