If the residual value of a leased asset is greater than the amount guaranteed by the lessee,the lessee
A) pays the lessor for the difference
B) recognizes a gain at the end of the lease term.
C) has no obligation related to the residual value.
D) pays the lessor for the difference.

Question

Quizplus · Accepted Answer

If the residual value of a leased asset is greater than the amount guaranteed by the lessee, the lessee has no obligation related to the residual value. This means that they are not required to pay the lessor for the difference nor will they recognize a gain at the end of the lease term. The lessee's obligation is only to make the lease payments as per the agreement.

If the Residual Value of a Leased Asset Is Greater