,CLFP - CLASS REVIEW STUDY QUESTIONS WELL ANSWERED WITH A GUARANTEED PASS!
When should lessor register as foreign corp? - (ANSWER)Within a state ...
Good - stock of them
Services offered
Inspection or repair of property
Office/employees
Negotiated contracts
What is dode of Hammurabi? - (ANSWER)- 1750 BC
- Acknowledges leasing of personal property in his code of laws
- First record of leasing law
Early examples of true lease? - (ANSWER)- Phoenicians shipping experts
- charters covered economic life of ships
- lessee to assume benefits and obligations of ownership
What is Statue of Whales? - (ANSWER)- 1284 AD
- leasing personal property
- 1571 defined who owned the lease property
What is Philadelphia Plan? - (ANSWER)- 1700's railroads companies only afford tracks
- Finance from private investors for locomotives/cars
- equipment trusts
- precursor of today conditional sale contract
When & how did Independent Leasing Start? - (ANSWER)- 1900's
- Offer short term contracts/leases
- lessor retain title
- rail cars would be returned at end
,- beginning of true/operating lease
- third party leasing companies
What is definition of captive? - (ANSWER)- sub of mfg. primary purpose to finance parents product
What is the benefit of captive? - (ANSWER)- Sales aid
- market control
- product differentiation
- Increase gross margin
- Ongoing customer contact
Why did lease re surge in 1950's? - (ANSWER)- government stimulate economy after WWII
- advance in technology in business equipment
- IRS 167
How does IRS 55-540 define true lease? - (ANSWER)P - payment exceed FMV - NOT
A - automatic titletransfer - NOT
I - interest contained in payment - NOT
N - nominal purchase option - NOT
E - equity in lease - NOT
E - excessive lease payments - NOT
What is different between FASB 13 and IRS 55-540? - (ANSWER)-FAB 13 - defines operating lease -
ACCT
- IRS 55-540 - defines tax lease - TAX
What is FASB 13? - (ANSWER)- 1976 Financial Accounting Standard Board
- Issued statement 13
- Set criteria by which to classify a lease capital/operating
, - defined treatment on financial statements
How does FASB 13 define an operating lease? - (ANSWER)B - bargin purchse option - NOT
E - economic useful life > 75% - NOT
A - automatic title transfer - NOT
P - PV of payments (no resid) > 90% of FMV - NOT
What is AMT? - (ANSWER)- Alternative Minimum Tax
- pay greater of regular tax or AMT
- limits depreciation benefit
- prompted growth in operating lease (lessee)
What is definition of Lease - (ANSWER)- 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
What are the key "from whose eyes" comparisons? - (ANSWER)- lessee vs. lessor
- operating vs capital (accounting)
- tax vs. non-tax (tax)
- true lease vs. secured transaction
What is ASC 840? - (ANSWER)- Accounting Standard Codification 840
- updated FASB 13
Key Elements of Lease Transaction? - (ANSWER)- lessee must sign
- lessor must sign
- paid invoice is transfer of ownership
When should lessor register as foreign corp? - (ANSWER)Within a state ...
Good - stock of them
Services offered
Inspection or repair of property
Office/employees
Negotiated contracts
What is dode of Hammurabi? - (ANSWER)- 1750 BC
- Acknowledges leasing of personal property in his code of laws
- First record of leasing law
Early examples of true lease? - (ANSWER)- Phoenicians shipping experts
- charters covered economic life of ships
- lessee to assume benefits and obligations of ownership
What is Statue of Whales? - (ANSWER)- 1284 AD
- leasing personal property
- 1571 defined who owned the lease property
What is Philadelphia Plan? - (ANSWER)- 1700's railroads companies only afford tracks
- Finance from private investors for locomotives/cars
- equipment trusts
- precursor of today conditional sale contract
When & how did Independent Leasing Start? - (ANSWER)- 1900's
- Offer short term contracts/leases
- lessor retain title
- rail cars would be returned at end
,- beginning of true/operating lease
- third party leasing companies
What is definition of captive? - (ANSWER)- sub of mfg. primary purpose to finance parents product
What is the benefit of captive? - (ANSWER)- Sales aid
- market control
- product differentiation
- Increase gross margin
- Ongoing customer contact
Why did lease re surge in 1950's? - (ANSWER)- government stimulate economy after WWII
- advance in technology in business equipment
- IRS 167
How does IRS 55-540 define true lease? - (ANSWER)P - payment exceed FMV - NOT
A - automatic titletransfer - NOT
I - interest contained in payment - NOT
N - nominal purchase option - NOT
E - equity in lease - NOT
E - excessive lease payments - NOT
What is different between FASB 13 and IRS 55-540? - (ANSWER)-FAB 13 - defines operating lease -
ACCT
- IRS 55-540 - defines tax lease - TAX
What is FASB 13? - (ANSWER)- 1976 Financial Accounting Standard Board
- Issued statement 13
- Set criteria by which to classify a lease capital/operating
, - defined treatment on financial statements
How does FASB 13 define an operating lease? - (ANSWER)B - bargin purchse option - NOT
E - economic useful life > 75% - NOT
A - automatic title transfer - NOT
P - PV of payments (no resid) > 90% of FMV - NOT
What is AMT? - (ANSWER)- Alternative Minimum Tax
- pay greater of regular tax or AMT
- limits depreciation benefit
- prompted growth in operating lease (lessee)
What is definition of Lease - (ANSWER)- 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
What are the key "from whose eyes" comparisons? - (ANSWER)- lessee vs. lessor
- operating vs capital (accounting)
- tax vs. non-tax (tax)
- true lease vs. secured transaction
What is ASC 840? - (ANSWER)- Accounting Standard Codification 840
- updated FASB 13
Key Elements of Lease Transaction? - (ANSWER)- lessee must sign
- lessor must sign
- paid invoice is transfer of ownership
