When the lessee guarantees only a portion of the estimated residual value, the:
A)lessor's and lessee's accounting entries will be symmetrical.
B)guaranteed portion is disregarded when computing the annual rentals.
C)lessee only takes into account the guaranteed portion when computing depreciation expense.
D)lessee will never have to compensate the lessor for the excess of the guaranteed amount over the actual residual value.

Question

Quizplus · Accepted Answer

The lessee considers only the guaranteed portion of the estimated residual value when computing depreciation expense, as this represents the part of the asset's cost that the lessee is responsible for over the lease term.

When the Lessee Guarantees Only a Portion of the Estimated