CLFP Financial and Tax Accounting for Leases Practice Exam

Unguaranteed residual value is the portion of the asset’s estimated end-of-lease value that is not guaranteed by the lessee or by a third party unrelated to the lessor. If a guarantor is related to the lessor, that guarantee doesn’t count as an independent guarantee, so the residual value remains unguaranteed. This matters because only truly independent guarantees reduce the risk the lessor bears about the asset’s future value, and it affects how guarantees are treated in lease accounting.