If the residual value of a leased asset turns out to be more than the amount guaranteed by the lessee, the:
A) Lessor must compensate the lessee for the excess.
B) Lessee must pay the lessor the amount of the excess.
C) Lessee will reduce the last year's depreciation.
D) Lessor is not obligated to compensate the lessee for the excess.

Question

Quizplus · Accepted Answer

The lessor is not obligated to compensate the lessee for the excess if the residual value of the leased asset turns out to be more than the amount guaranteed by the lessee. The lease agreement typically specifies the guaranteed residual value, and if the actual residual value at the end of the lease term exceeds the guaranteed amount, the lessor keeps the excess. As the lessee did not guarantee the excess amount, there is no obligation on the lessor to compensate the lessee for it.

If the Residual Value of a Leased Asset Turns Out