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

question 45

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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.


Definitions:

Contra Account

An account used in the general ledger to reduce the value of a related account when the two are netted together.

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