If the lessee expects to obtain title to leased property due to a purchase option that is reasonably certain to be exercised or the passage of title at the end of the lease term, the:

Multiple Choice

lessee adds the present value of the residual value to the amount recorded for the lease.

lessor ignores any residual value for the leased property.

lessor will always charge a higher annual lease rate.

lessee ignores any residual value for the leased property.