For a lessor, which of the following would NOT be included in the Gross Investment in Lease (Lease Receivable)?
A) guaranteed residual value
B) unguaranteed residual value
C) bargain purchase option
D) executory costs

Question

Quizplus · Accepted Answer

Executory costs, also known as lease incentives, are payments made by the lessor to the lessee, such as rent holidays or reimbursements for leasehold improvements. These costs are not included in the Gross Investment in Lease as they represent a reduction in the lessor's revenue from the lease. The guaranteed residual value, unguaranteed residual value, and bargain purchase option are all components of the Gross Investment in Lease.

For a Lessor, Which of the Following Would NOT Be