Burns, Inc. (lessor) agreed to lease a delivery van to Wilmore Corp. (lessee). The lease...
60.1K
Verified Solution
Link Copied!
Question
Accounting
Burns, Inc. (lessor) agreed to lease a delivery van to Wilmore Corp. (lessee). The lease was classified as a finance/sales-type lease, but the van will be turned back over to Burns at the end of six years.
Which of the following is true regarding the proper treatment of the delivery vans estimated residual value?
Multiple Choice
-
Estimated residual values are ignored by both parties when initially recording a lease.
-
In calculating the required lease payments, Burns will consider the estimated residual value regardless of whether it is guaranteed or unguaranteed by Wilmore.
-
In establishing the initial lease payable, Wilmore will include the present value of the full estimated residual value, but only if it is guaranteed.
-
In a lease that includes selling profit, the lessor will add the present value of the estimated residual value to sales revenue in the initial entry.
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.