If a car dealership leases cars for four years with guaranteed purchase options,guaranteed residual values,and insured financing agreements,these leases are treated as

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Sales-type leases are leases where the lessor (the car dealership in this case) effectively sells the leased asset to the lessee (the customer) and recognizes the profit or loss on the sale immediately. Guaranteed purchase options and residual values, as well as insured financing agreements, suggest that the lessor has transferred significant risks and rewards of ownership to the lessee, which is a characteristic of a sales-type lease. Operating leases typically do not include guaranteed purchase options, residual values, or financing agreements, while capital leases and direct-financing leases typically involve the transfer of ownership at the end of the lease term, which is not the case here.

If a Car Dealership Leases Cars for Four Years with Guaranteed