When a lessee is accounting for a capital (finance) lease
A) a guaranteed residual value is excluded from the "minimum lease payments."
B) an unguaranteed residual value is included in the "minimum lease payments."
C) a guaranteed residual value is basically an additional lease payment due at the end of the lease.
D) the present value of any guaranteed residual is deducted from the leased asset cost in determining the depreciable amount.

Question

Quizplus · Accepted Answer

A guaranteed residual value is considered an additional lease payment at the end of the lease term, which the lessee is either responsible for covering or ensuring the asset's residual value meets this guaranteed amount. This impacts the calculation of the minimum lease payments and the asset's value on the lessee's balance sheet.

When a Lessee Is Accounting for a Capital (Finance) Lease