Title transfer by the end of a lease is one of the criteria for capital lease recognition.

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Title transfer by the end of a lease is one of the four criteria for a lease to be recognized as a capital lease under accounting standards (ASC 840 and ASC 842). The other criteria include a bargain purchase option, lease term that is greater than or equal to 75% of the asset's economic life, and present value of lease payments that is greater than or equal to 90% of the asset's fair market value. If the lease meets any one of these criteria, it must be recognized as a capital lease on the lessee's balance sheet, with the leased asset and lease liability recorded as assets and liabilities, respectively.

Title Transfer by the End of a Lease Is One