Residual Values
Guaranteed RV:
- MLP includes guaranteed RV.
- Guaranteed RV lessee:
PVMLP
less PV guar RV
Total liability*
* Amortization schedule is based on this amount.
- Guaranteed RV is treated like a salvage value for depreciation.
- Carrying value of lease at the end equals the guaranteed RV.
- Lessor and lessee's accounting mirror each other.
- If MV < guaranteed RV at lease end then lessee records a loss.