Kleckner Company started operations in 2013. Although it has grown steadily, the company reported accumulated operating losses of $450,000 in its first four years in business. In the most recent year (2017), Kleckner appears to have turned the corner and reported modest taxable income of $30,000. In addition to a deferred tax asset related to its net operating loss, Kleckner has recorded a deferred tax asset related to product warranties and a deferred tax liability related to accelerated depreciation.

Given its past operating results, Kleckner has established a full valuation allowance for its deferred tax assets. However, given its improved performance, Kleckner management wonders whether the company can now reduce or eliminate the valuation allowance. They would like you to conduct some research on the accounting for its valuation allowance.

Present sales managers side. Additionally, the CFO at this company has asked for your guidance in evaluating leases.

Write a 150- to 200-word memo on this topic, specifically on how to determine whether substantially all of the risks and rewards of ownership are transferred in the lease. Address how "substantially all" is defined in the authoritative literature.

Include references.