In computing depreciation of a leased asset, the lessee should subtract
A) a guaranteed residual value and depreciate over the term of the lease.
B) an unguaranteed residual value and depreciate over the term of the lease.
C) a guaranteed residual value and depreciate over the life of the asset.
D) an unguaranteed residual value and depreciate over the life of the asset.

Question

Quizplus · Accepted Answer

A guaranteed residual value is considered in the computation of depreciation for a leased asset by the lessee, and the depreciation is typically spread over the term of the lease rather than the life of the asset. This approach reflects the lessee's expected use of the asset during the lease term and the anticipated value at the end of the lease.

In Computing Depreciation of a Leased Asset, the Lessee Should