When there is a unguaranteed residual value,the lessor includes the present value of the unguaranteed residual value in the lease receivable.

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This is because the unguaranteed residual value is not guaranteed by the lessee, and therefore, the lessor includes the present value of the amount in the lease receivable to compensate for the risk of not receiving the expected residual value at the end of the lease term.

When There Is a Unguaranteed Residual Value,the Lessor Includes the Present