If the lessee is expected to take ownership of a leased asset at the end of the lease term, the lessor must use an estimated residual value when calculating the lease payments necessary to achieve a desired rate of return.

Question

Quizplus · Accepted Answer

If the lessee is expected to take ownership of the leased asset at the end of the lease term, the lessor does not need to estimate a residual value for the purpose of calculating lease payments, as the asset's value is effectively realized through its transfer to the lessee.

If the Lessee Is Expected to Take Ownership of a Leased