Optional; found on the Inception tab. If known, enter this to have EZLease calculate the Implicit Rate for the lease. For FAS 13, the lower of the Implicit and Incremental Rates is used for the ¶7(d) present value test when a lease is classified. For IAS 17/ASC 842/IFRS 16, the implicit rate is used when known; otherwise, the incremental borrowing rate is used.
FAS 13 definition
“The estimated residual value of the leased property exclusive of any portion guaranteed by the Lessee or by any party related to the Lessee or by a third party unrelated to the Lessor.”
This is used to determine the implicit interest rate but is typically not known by the Lessee. If the unguaranteed residual value is not known, the implicit rate is not used in Lessee accounting for the lease.