CLFP Legal & Regulatory Compliance 2

Question 1

Under ASC 842 (the current FASB lease accounting standard), a lessee is required to recognize right-of-use assets and lease liabilities for:

Accepted Answer

Both finance leases and operating leases

Answer

ASC 842 requires lessees to recognize right-of-use assets and corresponding lease liabilities on the balance sheet for virtually all leases — both finance and operating — with an exception for short-term leases of 12 months or less.

Question 2

The Gramm-Leach-Bliley Act (GLBA) requires equipment lessors meeting the definition of 'financial institution' to:

Accepted Answer

Protect the privacy of consumers' nonpublic personal information and provide privacy notices

Answer

GLBA requires financial institutions to safeguard nonpublic personal information of consumers, provide privacy notices explaining information-sharing practices, and give consumers the right to opt out of certain information sharing.

Question 3

A 'Hell or High Water' clause in an equipment lease agreement means that:

Accepted Answer

The lessee's obligation to make lease payments is unconditional regardless of equipment malfunction, damage, or obsolescence

Answer

A 'Hell or High Water' clause makes the lessee's payment obligation absolute and unconditional, meaning the lessee must continue making payments even if the equipment fails, is destroyed, or becomes obsolete.

Question 4

The Electronic Signatures in Global and National Commerce Act (E-SIGN Act) established that electronic signatures on lease agreements are:

Accepted Answer

Legally valid and enforceable with the same legal effect as handwritten signatures

Answer

The E-SIGN Act established that electronic signatures and records are legally valid, enforceable, and given the same legal effect as paper documents and handwritten signatures in interstate commerce.

Question 5

Under Dodd-Frank, which equipment leasing transactions are most likely subject to Consumer Financial Protection Bureau (CFPB) oversight?

Accepted Answer

Leases to individual consumers or transactions with consumer-purpose characteristics

Answer

The CFPB has authority over consumer financial products and services, so equipment leases made to individual consumers or those with consumer-purpose characteristics are most likely subject to CFPB oversight.

CLFP - Certified Lease & Finance Professional Practice Test

CLFP - Certified Lease & Finance Professional Practice Test

CLFP Legal & Regulatory Compliance 2