alleryStart learning →Cost of sale for a manufacturer lessor is asset cost less PV of
AContingent rent
BUnguaranteed residual
CGuaranteed residual
DInitial direct costs
Answer & Solution
Correct answer: B. Unguaranteed residual
The unguaranteed residual stays with the lessor, so its present value is deducted from the cost of sale.
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Leaving a finance lease off the lessee's balance sheet understates obligations and distortFor a lessee, the amount of a residual value guarantee is theA lessor on finance leases also discloses accumulated provision forWhich must a lessor disclose for finance leases?In a finance leaseback, the carrying amount is written down only if there isLeaseback below fair value, loss offset by cheap rentals, isAsset sold at fair value Rs 6 lakh, carrying amount Rs 8 lakh, operating leaseback. Loss rOperating leaseback above fair value: the excess is