CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
CLFP - CLASS REVIEW STUDY EXAM QUESTIONS AND ANSWERS GRADED A+
1. What is dude of Hammurabi? - 1750 BC
- Acknowledges leasing of personal property in his code of laws
- First record of leasing law
2. Early examples of true lease? - Phoenicians shipping
experts
- charters covered economic life of ships
- lessee to assume benefits and obligations of ownership
3. What is Statue of Whales? - 1284 AD
- leasing personal property
- 1571 defined who owned the lease property
4. What is Philadelphia Plan? - 1700's railroads companies
only attorn tracks
- Finance from private investors for locomotives/cars
- equipment trusts
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
- precursor of today conditional sale contract
5. When & how did Independent Leasing Start? -
1900's
- Otter short term contracts/leases
- lessor retain title
- rail cars would be returned at end
- beginning of true/operating lease
- third party leasing companies
6. What is definition of captive? - sub of mfg. primary purpose
to finance parents’ product
7. What is the benefit of captive? - Sales aid
- market control
- product disorientation
- Increase gross margin
- Ongoing customer contact
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
8. Why did lease re surge in 1950's? - government
stimulate economy after WWII
- advance in technology in business equipment
- IRS 167
9. How does IRS 55-540 define true lease? P
- payment exceed FMV - NOT A - automatic title
transfer - NOT
I - interest contained in
payment - NOT N -
nominal purchase
option - NOT
E - equity in lease - NOT
E - excessive lease payments - NOT
10. What is different between FASB 13 and IRS 55-540?
-FAB 13 - defines operating lease
- ACCT
- IRS 55-540 - defines tax lease - TAX
11. What is FASB 13? - 1976 Financial Accounting Standard
Board
- Issued statement 13
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
- Set criteria by which to classify a lease capital/operating
- defined treatment on financial statements
12. How does FASB 13 define an operating lease?
B - barging purchase option - NOT E - economic useful
life > 75% - NOT
A - automatic title transfer - NOT
P - PV of payments (no resid) > 90% of FMV - NOT
13. What is AMT? - Alternative Minimum Tax
- pay greater of regular tax or AMT
- limits depreciation benefit
- prompted growth in operating lease (lessee)
14. What is definition of Lease: - a transaction in which use
and possession but not title to tangible property, is
transferred for consideration
- USE AN POSSESSION
- NOT TITLE
- TRANSFERRED FOR CONSIDERATION
15. What is the key "from whose eyes"
comparisons? - lessee vs. lessor
- operating vs capital (accounting)
CLFP - CLASS REVIEW STUDY EXAM QUESTIONS AND ANSWERS GRADED A+
1. What is dude of Hammurabi? - 1750 BC
- Acknowledges leasing of personal property in his code of laws
- First record of leasing law
2. Early examples of true lease? - Phoenicians shipping
experts
- charters covered economic life of ships
- lessee to assume benefits and obligations of ownership
3. What is Statue of Whales? - 1284 AD
- leasing personal property
- 1571 defined who owned the lease property
4. What is Philadelphia Plan? - 1700's railroads companies
only attorn tracks
- Finance from private investors for locomotives/cars
- equipment trusts
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
- precursor of today conditional sale contract
5. When & how did Independent Leasing Start? -
1900's
- Otter short term contracts/leases
- lessor retain title
- rail cars would be returned at end
- beginning of true/operating lease
- third party leasing companies
6. What is definition of captive? - sub of mfg. primary purpose
to finance parents’ product
7. What is the benefit of captive? - Sales aid
- market control
- product disorientation
- Increase gross margin
- Ongoing customer contact
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
8. Why did lease re surge in 1950's? - government
stimulate economy after WWII
- advance in technology in business equipment
- IRS 167
9. How does IRS 55-540 define true lease? P
- payment exceed FMV - NOT A - automatic title
transfer - NOT
I - interest contained in
payment - NOT N -
nominal purchase
option - NOT
E - equity in lease - NOT
E - excessive lease payments - NOT
10. What is different between FASB 13 and IRS 55-540?
-FAB 13 - defines operating lease
- ACCT
- IRS 55-540 - defines tax lease - TAX
11. What is FASB 13? - 1976 Financial Accounting Standard
Board
- Issued statement 13
,CLFP - CLASS REVIEW STUDY EXAM CLFP - CLASS REVIEW STUDY EXAM
- Set criteria by which to classify a lease capital/operating
- defined treatment on financial statements
12. How does FASB 13 define an operating lease?
B - barging purchase option - NOT E - economic useful
life > 75% - NOT
A - automatic title transfer - NOT
P - PV of payments (no resid) > 90% of FMV - NOT
13. What is AMT? - Alternative Minimum Tax
- pay greater of regular tax or AMT
- limits depreciation benefit
- prompted growth in operating lease (lessee)
14. What is definition of Lease: - a transaction in which use
and possession but not title to tangible property, is
transferred for consideration
- USE AN POSSESSION
- NOT TITLE
- TRANSFERRED FOR CONSIDERATION
15. What is the key "from whose eyes"
comparisons? - lessee vs. lessor
- operating vs capital (accounting)
