If the Residual Value of a Leased Asset Is Guaranteed

question 100

Multiple Choice

If the residual value of a leased asset is guaranteed by a third party

• A) it is treated by the lessee as no residual value.
• B) the third party is also liable for any lease payments not paid by the lessee.
• C) the net investment to be recovered by the lessor is reduced.
• D) it is treated by the lessee as an additional payment and by the lessor as realized at the end of the lease term.

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Definitions:

Proportionate Share

An individual's or group's fair or equitable portion of a whole, often related to shares in a company or distribution of assets.

Professional Malpractice Insurance

A form of liability insurance that helps protect professionals from financial loss resulting from claims of negligence or incompetence.

Negligence Claims

Legal demands for compensation by individuals who have suffered injury or loss due to another party's failure to exercise the appropriate level of care.

Insurance Policy

A contract between an insurer and a policyholder that determines the claims which the insurer is legally required to pay.