for a sales-type lease, a. the sales price includes the present value of the unguaranteed residual value. b. the present value of the guaranteed residual value is deducted to determine the cost of goods sold. c. the gross profit will be the same whether the residual value is guaranteed or guaranteed. d. none of these answers are correct.

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21-10-2022
Business

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for a sales-type lease, a. the sales price includes the present value of the unguaranteed residual value. b. the present value of the guaranteed residual value is deducted to determine the cost of goods sold. c. the gross profit will be the same whether the residual value is guaranteed or guaranteed. d. none of these answers are correct.

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akankshasharma92 akankshasharma92 · Answer 1 · 2022-10-26T10:35:46-04:00

The correct option is c. This means for the sales-type lease gross profit will be the same whether the residual value is guaranteed or guaranteed.

A finance lease in which the market rate value of the principal asset is not equivalent to its cost, resulting in a selling profit or loss, is referred to as a sales-type lease from the perspective of a lessor. An unguaranteed residual value, the current value of lease payments calculated using the implied interest rate, and the present value of the sales-type lease are recorded by the lessor as their net investment in lease at the lease's commencement date. It is recorded as a selling profit or loss if the market worth of the underlying asset exceed the carrying amount.

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