CLFP EXAM| ALL QUESTIONS AND CORRECT
ANSWERS| MOST RECENT 2025| RATED A+
CHAPTER 1 - HISTORY AND OVERVIEW - ANSWER
What is ASC 842? - ANSWER ASC 842 is the Accounting Standards Codification (ASC) topic issued
by the Financial Accounting Standards Board (FASB) that governs the accounting for leases.
What are the key changes brought by ASC 842? - ANSWER ASC 842 significantly changed lease
accounting by requiring lessees to recognize most leases on their balance sheets as both a right-
of-use asset and a lease liability.
What are the criteria for a lease to be classified as a finance lease under ASC 842? - ANSWER
The criteria include title transfer, bargain purchase option, lease term equal to or greater than
75% of the economic life, present value of payments equal to or greater than 90% of fair market
value, and specialized nature of the asset.
Double-Dip Lease - ANSWER Based on cross-border leases, but structured to take advantage of
tax benefits in both the lessee and lessor's country
Leveraged Lease - ANSWER · Unique mix of tax an accounting benefits.
· Up to 97% of recourse and nonrecourse debt is used to finance the assets.
· Created high returns on equity to the lessor which allowed the lessor to offer lower rates.
Synthetic Lease - ANSWER Designed to be a loan for tax purposes, but an operating lease for
accounting purposes.
Equipment Lease Definition - ANSWER A transaction in which use and possession, but not title
to tangible property, is transferred for consideration.
, Micro-Ticket - ANSWER · Less than $25,000
· Examples: credit card, machines, laptops, computers, etc.
Small-Ticket - ANSWER · Less than $250,000
· Examples: trucks, trailers, medical equipment, etc.
Mid-Ticket - ANSWER · Less than $5,000,000
· Examples: fleet vehicles, CNC machine tools, agricultural equipment, etc.
Large Ticket - ANSWER · Larger than $5,000,000
· Examples: Rail cars, aircraft, marine, etc.
Industry Participants - ANSWER · Equipment End-Users - Borrower/Lessee
· Third Party Originators - Brokers, Alternative Lenders, etc.
· Lessors & Lenders - Suppliers of the finance produce
· Investors - Capital market buyers and sellers
· Regulators - IRS, CFPB, etc.
· Trade Associations - AACFB, CLFP, ELFA, NEFA, etc.
· Service Companies - Software, Insurance, UCC filings, etc.
· Equipment Suppliers - Dealers, vendors, etc.
Government Leasing - ANSWER · Three categories - municipal leasing, leases to the federal
government, Lease to the Native American tribes and nations.
· Each is subject to unique tax implications, documentation structure, and early termination
requirements.
ANSWERS| MOST RECENT 2025| RATED A+
CHAPTER 1 - HISTORY AND OVERVIEW - ANSWER
What is ASC 842? - ANSWER ASC 842 is the Accounting Standards Codification (ASC) topic issued
by the Financial Accounting Standards Board (FASB) that governs the accounting for leases.
What are the key changes brought by ASC 842? - ANSWER ASC 842 significantly changed lease
accounting by requiring lessees to recognize most leases on their balance sheets as both a right-
of-use asset and a lease liability.
What are the criteria for a lease to be classified as a finance lease under ASC 842? - ANSWER
The criteria include title transfer, bargain purchase option, lease term equal to or greater than
75% of the economic life, present value of payments equal to or greater than 90% of fair market
value, and specialized nature of the asset.
Double-Dip Lease - ANSWER Based on cross-border leases, but structured to take advantage of
tax benefits in both the lessee and lessor's country
Leveraged Lease - ANSWER · Unique mix of tax an accounting benefits.
· Up to 97% of recourse and nonrecourse debt is used to finance the assets.
· Created high returns on equity to the lessor which allowed the lessor to offer lower rates.
Synthetic Lease - ANSWER Designed to be a loan for tax purposes, but an operating lease for
accounting purposes.
Equipment Lease Definition - ANSWER A transaction in which use and possession, but not title
to tangible property, is transferred for consideration.
, Micro-Ticket - ANSWER · Less than $25,000
· Examples: credit card, machines, laptops, computers, etc.
Small-Ticket - ANSWER · Less than $250,000
· Examples: trucks, trailers, medical equipment, etc.
Mid-Ticket - ANSWER · Less than $5,000,000
· Examples: fleet vehicles, CNC machine tools, agricultural equipment, etc.
Large Ticket - ANSWER · Larger than $5,000,000
· Examples: Rail cars, aircraft, marine, etc.
Industry Participants - ANSWER · Equipment End-Users - Borrower/Lessee
· Third Party Originators - Brokers, Alternative Lenders, etc.
· Lessors & Lenders - Suppliers of the finance produce
· Investors - Capital market buyers and sellers
· Regulators - IRS, CFPB, etc.
· Trade Associations - AACFB, CLFP, ELFA, NEFA, etc.
· Service Companies - Software, Insurance, UCC filings, etc.
· Equipment Suppliers - Dealers, vendors, etc.
Government Leasing - ANSWER · Three categories - municipal leasing, leases to the federal
government, Lease to the Native American tribes and nations.
· Each is subject to unique tax implications, documentation structure, and early termination
requirements.
