When the lessee guarantees an estimated residual value of $75,000, the amount the lessee records as a right-of-use asset and as a lease liability is increased by $75,000.

Question

Quizplus · Accepted Answer

The lessee's guarantee of an estimated residual value does not increase the amount recorded as a right-of-use asset or a lease liability. The estimated residual value is used in determining the lease payments, but it is not recorded as an additional asset or liability.

When the Lessee Guarantees an Estimated Residual Value of $75,000