Exam (elaborations)
CLFP EXAM (Classification & Terminology in Leasing) with Questions & Answers Graded A
- Course
- Institution
CLFP EXAM (Classification & Terminology in Leasing) with Questions & Answers Graded A
[Show more]
Seller
Follow
Content preview
CLFP EXAM (Classification & Terminology inLeasing) with Questions & Answers Graded A
How is a lessor supposed to account for an operating lease? - ✔✔1.) Show the property being
leased as a fixed asset.
2.) All the period income payments are taken into income and
3.) the initial direct cost must be capitalized and later expensed over the lease term.
Per ASC 840, what are the four (4) criteria used to determine lease status from an accounting
perspective? None can be met for operating lease status. - ✔✔1.) Title automatically transfers
to lessee at end of lease; or
2.) Contains a bargain purchase option; or
3). The lease term is >= 75% of the assets useful life; or
4.) The PV of the payments at lease inception are >= 90% of the FMV of the property
When conducting ASC 840 criteria testing on a transaction, what rate is used in the minimum lease
payment PV calculation - ✔✔Discount rate for the lessor and the incremental borrow rate for
the lessee
What is ASU 2016-02? - ✔✔1.) FASB/GAAP change that calls for operating leases to be reported
on the balance sheet and eliminates the distinction between finance and operating leases.
2) lessee can use term, payment and incremental borrowing rate to capitalize asset to offset liability
3.)Lessors will have to be aware lessee obligation is no longer off balance sheet and change sales
and underwriting techniques
From a legal perspective, why is it important properly classify a lease? - ✔✔To determine who
OWNS the asset.
, What is Article 2A of the UCC? - ✔✔Defines a lease as "a transfer of the right to possession and use of
a goods for term in return for consideration, but a sale, including the sale on approval or a sale on return
or retention or creation of a security interest, is not a lease"
Which UCC articles govern leases or loans? - ✔✔Article 2A = Lease
Article 9 = Loan
What is a Consumer Lease? - ✔✔As defined by Ariticle 2A of UCC, a lease that a lessor regularly
engaged in the business of leasing or selling make to a lessee, except an organization, which undertakes
a the lease primarily for personal, family or household purpose.
What is a Direct Finance Lease? - ✔✔As defined by Article 2A of UCC, this is a majority of leases in
the industry in which
1) the lessor does not select the supplier of the goods
2.) the lessor acquires the goods
3a.) lessee receives a copy of the contract evidencing the lessor's purchase of the goods prior to signing
the contact;
3b) lessee's approval of the vendor is part of acceptance of the lease contract; or
3c) the lessee is provided in writing identifying lessee, their rights and warranties
What is a Purchase? - ✔✔As defined by Article 2A of UCC, The taking of a sale, lease, mortgage,
security interest, pledge, or other voluntary transaction that creates ownership interest in the goods.
What is a sublease? - ✔✔As defined by Article 2A of UCC, is an agreement in which the lessee in
teh lease assigns the lease, including right to possession and use of the asset to a third party making
the original lessess sub-lessor and the new lessee a sub-lessee.
What is Bailment? - ✔✔The delivery of property from a bailor to a bailee with an obligation by
the bailee to return it. A lease is one form of bailmant
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller KenAli. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.79. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79650 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now