Which document is issued by a lessor to the supplier and states that the lessor intends to purchase the equipment upon fulfillment of all terms and conditions?

• A. Purchase Order
• B. Purchase Option
• C. Advance Funding/Pre-Funding Agreement
• D. Identification of Parties

Answer: (A)

A purchase order is the document used by the lessor to commit to acquiring equipment from the supplier once all terms and conditions are fulfilled. It serves as a binding instruction and promise to purchase, detailing the agreed-upon price, delivery, and other conditions, and it initiates the supplier’s shipment and the overall purchase process within the lease framework.

In contrast, a purchase option would give a future right to buy rather than an immediate commitment to purchase upon meeting terms; an advance funding/pre-funding agreement relates to how funds are provided to cover the purchase, not to the act of committing to buy upon fulfillment; and identification of parties simply lists who is involved without creating a purchase obligation.