Lease Receivable Amount Explanation

What does the lease receivable amount include?

a. rental payments only

b. rental payments plus the present value of the guaranteed residual value only

c. rental payments plus the present value of guaranteed and unguaranteed residual values

d. rental payments plus the present value of the unguaranteed residual value only

Answer:

Answer is C.

The lease receivable amount incorporates the present worth of rental payments in addition to the present worth of guaranteed and unguaranteed residual values. This means that both guaranteed and unguaranteed residual values are included in the calculation of the lease receivable amount.

The lease receivable amount represents the total amount that the lessor expects to receive over the term of the lease. It includes the present value of the rental payments, as well as the present value of both the guaranteed and unguaranteed residual values.

Rental payments are the periodic payments made by the lessee to the lessor for the use of the leased asset. The present value of these rental payments is calculated to determine the lease receivable amount.

In addition to rental payments, a lease may also involve a guaranteed residual value, which is the estimated value of the leased asset at the end of the lease term.

Therefore, the correct answer is option (C) rental payments plus the present value of guaranteed and unguaranteed residual values.