A lessee who is not responsible for the difference between the residual value and the actual cash value has entered into what type of lease?

A lessee who is not responsible for the difference between the residual value and the actual cash value has entered into a closed-end lease. In this type of arrangement, the leasing company assumes the risk associated with the vehicle’s residual value at the end of the lease term. This means that if the leased asset, such as a car, has a lower value than anticipated at the end of the lease, the lessee is not liable for the loss in value. Instead, the leasing company absorbs that risk.

Closed-end leases typically offer more peace of mind for the lessee, as they do not need to worry about market fluctuations affecting the asset's value at lease maturity. The payments made over the lease term are generally based on depreciation and the intended usage of the vehicle, rather than the risk of residual value loss, which is a significant distinguishing feature of this lease type.

In contrast, other forms of leases such as open-end leases require the lessee to cover any deficits between the estimated residual value and the actual cash value, placing the risk on them. Net leases and operating leases have different characteristics and implications regarding expenses, obligations, and asset ownership, which do not align with the specific scenario of a lessee being shielded from residual value