Final answer:
Lessor accounting for residual values in leases includes recognizing a higher gross profit for leases with guaranteed residual values compared to those with unguaranteed values. The correct option reflecting this is 'c'.
Step-by-step explanation:
When lessors account for residual values related to leased assets, they consider whether the residual value is guaranteed by the lessee or not. A guaranteed residual value is included in the calculation of both the lease receivable and income for the lessor. If the lease is a sales-type lease with a guaranteed residual value, the lessor will recognize higher gross profit compared to a sales-type lease with an unguaranteed residual value.
In a lease agreement, the residual value represents the estimated fair value of the leased asset at the end of the lease term. In the case of a guaranteed residual value, the lessee assures the lessor that the asset will be worth at least a certain amount at the conclusion of the lease period. If the actual residual value is less than the guaranteed amount, the lessee must cover the difference. Conversely, an unguaranteed residual value means that the lessor bears the risk if the asset's market value is lower than expected at the end of the term.
Accordingly, the correct option is 'c', which states that lessors recognize more gross profit on a sales-type lease with a guaranteed residual value than on a sales-type lease with an unguaranteed residual value.