GAAP defines lessors' treatment of leases according to Type I and Type II characteristics.Type I characteristics are linked to

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Type I characteristics are linked to the critical event criteria for revenue recognition. These are lease agreements in which the lessor transfers substantially all of the risks and rewards of ownership to the lessee, and the lessor does not retain control over the leased asset. Gaap requires the lessor to recognize lease revenue at the commencement of the lease term for Type I leases.

GAAP Defines Lessors' Treatment of Leases According to Type I