Transfer of ownership clause samples

The Company then assessed the guidance under ASC 840-10-25-68 to determine whether the building element should be accounted for as a direct financing lease, a leveraged lease or an operating lease as appropriate under ASC 840-10-25-43. The Company determined that the building element did not meet the sales-type criteria under ASC 840-10-25-43(a) as there is no transfer of ownership. The Company determined that the building element met the criteria under ASC 840-10-25-43(b) as the lease meets both of the criteria in ASC 840-10-25-42, does not give rise to any manufacturer’s or dealer’s profit or loss to the lessor as the leases are recorded at fair value and does not meet the criteria to be recorded as a leveraged lease as it does not involve three parties. As a result, the Company concluded that the building element should be accounted for as a direct financing lease.