Social Science Economics
CLFP EXAM - Financial and Tax Accounting for
Leases
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CLFP Exam CLFP Sample Exam - Credit (35 Que... Oregon Real Estate
Teacher 71 terms 35 terms 51 terms
SIRANTOS Preview conwallin Preview rashidabdalah030
Consistent treatment of like transactions to allow clarity in
What is a primary goal of the
presentation and consistency in interpretation of financial
accounting profession?
statements prepared by various individuals or entities.
Created Opinion #5 (Reporting of Leases in Financial Statements
How did APB (Accounting of Lessees) and Opinion #7 (Accounting for Leases in Financial
Principals Board) fail? Statements for Lessors) that ha different opinions and left lessors
& lessees with conflicting rules.
Financial Accounting Standards Board issued "Accounting for
What was FASB 13? Leases" which was a comprehensive set of standards to be
followed by lessors and lessees in accounting lease transactions.
What is Accounting Standards Approved by FASB in 7/2009, a single source of of authoritative
Codification? US accounting and reporting standards
What now governs lease ASC 840
accounting?
a provision allowing lessee, at his option, to renew the lease for a
What is a Bargain Renewal rental sufficiently lower than the expected fair value of the
Option? property at the date the option becomes excercisable. It is
reasonably assured the renewal option will be exercised.
a provision allowing lessee, at his option, to purchase the
property for a price sufficiently lower than the expected fair
What is a Bargain Purchase
market value of the property at the date the option becomes
Option?
excercisable. It is reasonably assured the purchase option will be
exercised.
Rentals that represent increases or decreases in the lease
payments made that result from changes in the factors on which
What are Contingent Rentals? lease payments are based occurring subsequent to the inception
of the lease. Increases may occur due to increased construction
cost or indexed interest rates.
, At the inception of the the lease, the estimated remaining period
during which the property is expected to be economically
What is Economical Useful Life
usable for its intended purpose by one or more users. This may
of Leased Property?
be impacted by usage, technology and deterioration.
Independent of lease term.
What is Residual Value of Leased Estimated fair value of the lease property at the end of the lease.
Property?
The costs such as insurance, maintenance and taxes incurred for
What is Executory Costs? the leased property, whether paid by lessor or lessee. Also
include costs paid by lessee as guarantor.
The price at which the property could be sold at an arm's length
transaction by unrelated parties.
What is Value of Leased 1.) normal selling price, net volume discounts, for a lessor who
Property? manufacturer/dealer
2.) Cost, net volume discounts for a lessor that is note a
manufacturer or dealer.
The discount rate that, when applied to the minimum lease
payments cause the aggregate present value at the beginning of
What is Implicit Interest Rate?
the lease term to be equal to the fair value of the leased
property to the lessor at the inception of the lease.
What is Inception of the Lease? The date lease commitment.
The rate, at the inception of the lease, the lessee would have
What is Incremental Borrowing
incurred to borrow, under like terms, the funds necessary to
Rate?
purchase the lease asset.
Costs incurred by lessor that are
1) to originate the lease in transactions with independent third
What is Initial Direct Cost (IDC)? parties that are required and would have occurred regardless of
leasing
2.) certain cost incurred by the lessor
An agreement conveying right to use property, plant or
What is a Lease?
equipment for stated period of time and rental payment.
The fixed, non cancel-able term of the lease plus:
1.) period covered by bargain renewal options
2.) period covered by a renewal when a significant penalty for
failure to renew exists;
What is Lease Term? 3.) Ordinary renewal periods
4.) Renewal periods that precede a bargain purchase option.
5.) Renewal periods that are at the option of the lessor
6.) does not exceed term beyond when the bargain purchase
option can be exercised.
All payments the lessee is obligated to make under the lease
agreement (outside of executory costs)
What is Maximum Lease 1.) minimum rentals
Payments? 2.) Lessee guarantee of the residual value
3.) Penalties for failure to renew.
4.) Calc for lessor to include guaranteed residual
CLFP EXAM - Financial and Tax Accounting for
Leases
Save
Students also studied
Flashcard sets Study guides
CLFP Exam CLFP Sample Exam - Credit (35 Que... Oregon Real Estate
Teacher 71 terms 35 terms 51 terms
SIRANTOS Preview conwallin Preview rashidabdalah030
Consistent treatment of like transactions to allow clarity in
What is a primary goal of the
presentation and consistency in interpretation of financial
accounting profession?
statements prepared by various individuals or entities.
Created Opinion #5 (Reporting of Leases in Financial Statements
How did APB (Accounting of Lessees) and Opinion #7 (Accounting for Leases in Financial
Principals Board) fail? Statements for Lessors) that ha different opinions and left lessors
& lessees with conflicting rules.
Financial Accounting Standards Board issued "Accounting for
What was FASB 13? Leases" which was a comprehensive set of standards to be
followed by lessors and lessees in accounting lease transactions.
What is Accounting Standards Approved by FASB in 7/2009, a single source of of authoritative
Codification? US accounting and reporting standards
What now governs lease ASC 840
accounting?
a provision allowing lessee, at his option, to renew the lease for a
What is a Bargain Renewal rental sufficiently lower than the expected fair value of the
Option? property at the date the option becomes excercisable. It is
reasonably assured the renewal option will be exercised.
a provision allowing lessee, at his option, to purchase the
property for a price sufficiently lower than the expected fair
What is a Bargain Purchase
market value of the property at the date the option becomes
Option?
excercisable. It is reasonably assured the purchase option will be
exercised.
Rentals that represent increases or decreases in the lease
payments made that result from changes in the factors on which
What are Contingent Rentals? lease payments are based occurring subsequent to the inception
of the lease. Increases may occur due to increased construction
cost or indexed interest rates.
, At the inception of the the lease, the estimated remaining period
during which the property is expected to be economically
What is Economical Useful Life
usable for its intended purpose by one or more users. This may
of Leased Property?
be impacted by usage, technology and deterioration.
Independent of lease term.
What is Residual Value of Leased Estimated fair value of the lease property at the end of the lease.
Property?
The costs such as insurance, maintenance and taxes incurred for
What is Executory Costs? the leased property, whether paid by lessor or lessee. Also
include costs paid by lessee as guarantor.
The price at which the property could be sold at an arm's length
transaction by unrelated parties.
What is Value of Leased 1.) normal selling price, net volume discounts, for a lessor who
Property? manufacturer/dealer
2.) Cost, net volume discounts for a lessor that is note a
manufacturer or dealer.
The discount rate that, when applied to the minimum lease
payments cause the aggregate present value at the beginning of
What is Implicit Interest Rate?
the lease term to be equal to the fair value of the leased
property to the lessor at the inception of the lease.
What is Inception of the Lease? The date lease commitment.
The rate, at the inception of the lease, the lessee would have
What is Incremental Borrowing
incurred to borrow, under like terms, the funds necessary to
Rate?
purchase the lease asset.
Costs incurred by lessor that are
1) to originate the lease in transactions with independent third
What is Initial Direct Cost (IDC)? parties that are required and would have occurred regardless of
leasing
2.) certain cost incurred by the lessor
An agreement conveying right to use property, plant or
What is a Lease?
equipment for stated period of time and rental payment.
The fixed, non cancel-able term of the lease plus:
1.) period covered by bargain renewal options
2.) period covered by a renewal when a significant penalty for
failure to renew exists;
What is Lease Term? 3.) Ordinary renewal periods
4.) Renewal periods that precede a bargain purchase option.
5.) Renewal periods that are at the option of the lessor
6.) does not exceed term beyond when the bargain purchase
option can be exercised.
All payments the lessee is obligated to make under the lease
agreement (outside of executory costs)
What is Maximum Lease 1.) minimum rentals
Payments? 2.) Lessee guarantee of the residual value
3.) Penalties for failure to renew.
4.) Calc for lessor to include guaranteed residual
