In the curriculum, there is an example on page 157 about SPE for leased asset. Therein, there’s a term, residual value guarantee, that I don’t understand. Could anyone help answer? Thx
Residual value is the same as salvage value: the amount you believe the asset will be worth at the end of its useful life. When you lease an asset (e.g., a car), you (as the lessee) guaranty to the lessor that the residual value will be at least a certain amount, and are obligated to make up the difference (i.e., pay the lessor) should the residual value fall short of that guaranteed amount.