A lessor classifies each lease on substance rather than form: a finance lease passes substantially all of ownership's incidental risks and rewards to the lessee, an operating lease does not. Situations that normally point to a finance lease are transfer of ownership by the end of the term, a bargain purchase option reasonably certain at inception, a term for the major part of the asset's economic life, a present value of lease payments amounting to substantially all of the asset's fair value, and an asset so specialised that no one but the lessee could use it without major changes; further indicators are the lessee bearing the lessor's cancellation losses, residual fair value gains and losses accruing to the lessee, and a bargain secondary period. These are not conclusive, and variable payments or a transfer at a variable price equal to fair value may show the risks and rewards are retained. Land and buildings elements are classified separately where necessary, considering that land normally has an indefinite life, and an intermediate lessor classifies a sublease against the head lease right-of-use asset (or as an operating lease where the head lease is short-term). Classification is fixed at inception and reconsidered only on a modification, never for changed estimates or lessee default.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.