value recovery provision

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One of the four capitalization criteria laid down by the US Financial Accounting Standards Board (FASB) for classification of non-cancelable leases. Accordingly, if the present value of the minimum lease payments (not including executory costs) is equal to or greater than 90 percent of the excess of fair market value of the leased asset over any applicable investment tax-credit availed by the lessor, the lessee must classify (and account for) the lease as a capital lease. See also bargain purchase provision, economic life provision, and title transfer provision.

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