Question
Asked Jan 25, 2020
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The residual value is the estimated fair value of the leased property at the end of the lease term.

a.    Of what significance is (1) an unguaranteed and (2) a guaranteed residual value in the lessee's accounting for a finance lease transaction?

b.    Distinguish between lease payments used to determine lease classification compared to lease payments for measuring the lease liability.

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Expert Answer

Step 1

Finance lease is also known as capital lease.

This is a long term lease agreement in which the lessee records...

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