A lessor enters into a sales-type lease.Which of the following statements is true if the leased asset has an unguaranteed residual value?
A)The gross profit recognized is less than it would be if the residual was guaranteed.
B)The gross profit recognized is more than it would be if the residual was guaranteed.
C)The lessor should decrease the cost of goods sold by the amount of the unguaranteed residual value.
D)The gross profit is the same as it would be if the residual was guaranteed.

Question

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The Answer of A lessor enters into a sales-type lease.Which of the following statements is true if the leased asset has an unguaranteed residual value?
A)The gross profit recognized is less than it would be if the residual was guaranteed.
B)The gross profit recognized is more than it would be if the residual was guaranteed.
C)The lessor should decrease the cost of goods sold by the amount of the unguaranteed residual value.
D)The gross profit is the same as it would be if the residual was guaranteed.

A Lessor Enters into a Sales-Type Lease