Residual Value Guarantees

Residual value guarantees are a guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount. 

842-10-30-5 (Initial Measurement of the Lease Payments): At the commencement date, the lease payments shall consist of the following payments relating to the use of the underlying asset during the lease term: (f) For a lessee only, amounts probable of being owed by the lessee under residual value guarantees. 

In NetLease: Residual value payments that are probable of being owed by the lessee should be included in the final month's payment amount in NetLease (in addition to any other payment amounts). For example, if the final month's rent payment is $10,000, and the contract contains a residual value guarantee of $15,000, the final payment amount entered into NetLease should be $25,000.