With respect to the computation of minimum lease payments by the lessee, how are the following items handled in the computation?

$\quad $$\quad $$\text{ GuaranteedUnguaranteed } $
$\begin{array}{cc}
&\text{ Residual Value }&\text {Residual Value }\\end{array}$
A)$\begin{array}{cc}& \text{Included }& &&&\text{Excluded }\\end{array}$
B)$\begin{array}{cc}&\text{ Included }& &&&\text{Included} \\end{array}$
C)$\begin{array}{cc} &\text {Excluded} &&&&\text {Included} \\end{array}$
D) $\begin{array}{cc}&\text{ Excluded }&&& \text{Excluded} \
\end{array}$

Question

With respect to the computation of minimum lease payments by the lessee, how are the following items handled in the computation?

$\quad $$\quad $$\text{ GuaranteedUnguaranteed } $
$\begin{array}{cc}
 &\text{ Residual Value }&\text {Residual Value }\\end{array}$
A)$\begin{array}{cc}& \text{Included }& &&&\text{Excluded }\\end{array}$
B)$\begin{array}{cc}&\text{ Included }& &&&\text{Included} \\end{array}$
C)$\begin{array}{cc} &\text {Excluded} &&&&\text {Included} \\end{array}$
D) $\begin{array}{cc}&\text{ Excluded }&&& \text{Excluded} \
\end{array}$

Quizplus · Accepted Answer

Guaranteed residual values are included in the computation of minimum lease payments by the lessee because they represent amounts the lessee guarantees to make the lessor whole at the end of the lease term. Unguaranteed residual values are excluded because they represent amounts beyond the lessee's obligation and are assumed by the lessor.

With Respect to the Computation of Minimum Lease Payments by the Lessee