1|Page
CLFP CLASS REVIEW STUDY EXAM LATEST
2024/2025 WITH ACTUAL QUESTIONS AND
CORRECT VERIFIED ANSWERS/ALREADY
GRADED A+
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
,2|Page
- 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
,3|Page
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
, 4|Page
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
CLFP CLASS REVIEW STUDY EXAM LATEST
2024/2025 WITH ACTUAL QUESTIONS AND
CORRECT VERIFIED ANSWERS/ALREADY
GRADED A+
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
,2|Page
- 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
,3|Page
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
, 4|Page
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
