To be classified as a capital lease, a lease must meet all four of the capital lease criteria.

Name: To be classified as a capital lease, a lease must meet all four of the capital lease criteria.
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A lease only needs to meet one of the four criteria to be classified as a capital lease under the old accounting standards (ASC 840). However, under the new standard (ASC 842), the classification has changed to finance leases, which also require meeting one of the criteria.

To Be Classified as a Capital Lease, a Lease Must