In the Situation Where There Is an Unguaranteed Residual in a Finance

question 45

True/False

In the situation where there is an unguaranteed residual in a finance lease agreement,the leased asset will be recorded in the books of the lessee at an amount less than its fair value at the inception of the lease.

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Definitions:

Sale of Goods Transaction

A commercial activity involving the transfer of ownership of tangible personal property from a seller to a buyer for a price.

Bill of Exchange

A written, unconditional order by one party directing another party to pay a specified sum of money to a third party at a specified time.

Pay Money

The act of giving a certain amount of currency or financial value in exchange for goods or services.

Third Person

An individual who is not directly involved in a contract or legal agreement but may be affected by it.