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

Question

Quizplus · Accepted Answer

In calculating depreciation of a leased asset, the lessee should subtract the guaranteed residual value and depreciate over the term of the lease. This approach aligns with accounting standards, ensuring that the depreciation expense reflects the lessee's expected use of the asset over the lease term, considering the residual value guaranteed by the lessee.

In Calculating Depreciation of a Leased Asset, the Lessee Should