To be short: Yes But please read thru all below:

by lessee or any third-party not related to the lessee:(Both)

Definition of Residual Value Guaranteedclick to see the definition.

Per Becker CPA FR Notes:(Please bear with me with my lengthy explanations below, it's hard not to since it's not as easy as it appears.)

Capitalized amount (Asset, will equal to lease obligation in the first JE of a capital lease) if meeting one of "OWNS" from Leasees' perspective:

The LESSER of

1)the fair value of the asset OR

2)the present value of the minimum lease payments.

If the pv of mlp is the lesser of the two, then,

the minimum lease payments will include the following three:

a)required payments (PV of annuity) + (b) bargain purchase option if any (PV of $1) +(c) residual value guaranteed by the LESSEE if any (PV of $1).

However to exclude executory costs (insurance, maintenance & taxes ) from the minimum lease payments.

And interest rate will the the LESSER OF

1)Implicit rate if known by lessee or 2) lessee's incremental borrowing rate.

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JE's might help us understand better: (Interest expense will be calculated with EFFECTIVE INTEREST METHOD) Don't confuse it with bond's effective interest method, not as complicated.

Beginning of lease

Dr. Capital Lease (at capitalized amount = lesser of FV or MLP)

Cr.  Lease obligation (same as capitalized amount)

If paid first payment at lease inception date, all to principal:

Dr. Lease obligation

Cr.  Cash

2nd payment and on, (split between prin and int using effective interest rate - lesser of implicit rate known to lessee OR incremental borrowing rate)

Dr. Interest expense xxx

Dr. Lease obligation (prin) yyy

Cr.      Cash (constant)        zzzz

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Capital lease accounting link Please click here.

Remember LESSER in a Capital Lease is a passkey.

Definition of Residual Value Guaranteed