Asked by Bimala Sharma Acharya on May 11, 2024
Verified
If a leased asset has a negative residual value,for example,as a result of a statutory requirement to dispose of an asset in an environmentally sound manner,the lessee of the asset could reasonably expect to pay a lower lease rate because the asset does not have a positive residual value.
Negative Residual Value
Negative residual value implies that the value of an asset at the end of its useful life is expected to be less than zero, indicating costs associated with disposal or removal.
Environmentally Sound
Practices or operations that have a minimal negative impact on the environment, promoting sustainability.
Lease Rate
The cost of leasing or renting a particular asset, property, or equipment, usually expressed as a payment amount per time period.
- Comprehend the notion of residual value and its impact on decisions related to leasing.
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Learning Objectives
- Comprehend the notion of residual value and its impact on decisions related to leasing.
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