ABC Inc. leased a drilling equipment form a regional oil services company. The oil company purchased the drilling equipment from an international drilling equipment manufacturer at a cost of700,000 SR. The following information is given:

Which Condition met?

Given these information

Lease term : 3 years

Payment frequency: semiannual (at the end of the periods)

Economic life of the asset Three years

Payment amount: 120,000 SR

Rate (lessors and the lowest rate) 12%

Ownership transfers

A bargain purchase option

The noncancelable lease term is equal to 75% or more of the expected economic life of the asset,

The PV of the minimum lease payments is 90% or more of the fair value of the asset

Operating