CLP Lease Law, Tax, and Accounting

Question 1

Which UCC article governs the leasing of goods in the United States?

Accepted Answer

Article 2A

Answer

Article 2A of the Uniform Commercial Code covers leases of personal property and outlines the rights and responsibilities of parties involved.

Question 2

How is a capital lease typically reported on a lessee’s balance sheet under GAAP?

Accepted Answer

As both an asset and a liability

Answer

Capital leases are recorded as both an asset and a liability, reflecting the right to use the asset and the obligation to make payments.

Question 3

Which of the following is a tax advantage of a true lease for the lessee?

Accepted Answer

Deductibility of lease payments

Answer

In a true lease, the lessee may be able to deduct lease payments as an operating expense, reducing taxable income.

Question 4

What is the primary difference between a lease and a secured loan under UCC rules?

Accepted Answer

A lease provides usage rights without ownership.

Answer

A lease grants the right to use an asset, while a secured loan typically results in the transfer of ownership and requires a security interest.

Question 5

Which entity typically claims depreciation on leased equipment in a true lease?

Accepted Answer

Lessor

Answer

In a true lease, the lessor retains ownership and is entitled to take depreciation deductions for tax purposes.

(CLP) Certified Leasing Professional Practice Test