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hi im kyle ashcraft of maxwell cpa review and my goal is to help students pass the cpa exams as quickly as possible in todays lesson were going to talk all about accounting for leases so were going to talk about finance leases and operating leases were going to start out by talking about how to distinguish between the two and then from there its really important to understand all of the journal entries for them so were going to take one similar example and run through all of the journal entries for a finance lease and then for an operating lease so with that lets jump in so first lets talk about distinguishing between a finance lease and an operating lease if the lease just meets one of these five criteria then its going to be considered a finance lease and then if it doesnt meet any of these criteria then its just going to be an operating lease so first if the title actually transfers at the end of the lease it will be a finance lease if you have a purchase option that is