Problem:
Snappy Corporation enters into a lease agreement with Long Leasing. Long requires that the lease qualify as a sale. Snappy can fill this requirement by either guaranteeing the residual value itself or having a third party guarantee the residual value. Self-guarantee of the residual value will result in a capital lease to Snappy. The third-party guarantee will allow Snappy to report the lease as an operating lease (off-balance sheet financing).
Argue for recording the lease as a capital lease.