If the lessor retains title to leased property under the terms of the lease:
A)The amount to be recovered through periodic lease payments is reduced by the present value of the residual amount.
B)The amount to be recovered through periodic lease payments is increased by the present value of the residual amount.
C)The amount to be recovered will be the same as if there were no residual value.
D)The lessor will record a greater amount of depreciation due to the residual value.

Question

Quizplus · Accepted Answer

The lessor retains title to the leased property and expects to recover the residual value at the end of the lease term. Therefore, the present value of the residual value is subtracted from the total amount to be recovered through lease payments.

If the Lessor Retains Title to Leased Property Under the Terms