on the extent to which ?

Main clause: The classification of leases is based on the extent
Independent (defining relative) clause: to which risks and rewards incidental to ownership ..., where "which" refers to "extent".

Meanings of some Phrases:
based on = 基於
incidental to (something) = 附帶產生 = naturally happening as a result of (something)
incidental to ownership of a leased asset = 由於擁有所租賃資產而產生的
risks and rewards = 風險和回報
lie with = 存在於
the lessor or the lessee = 出租人或承租人

extent = 程度
the extent to which = how much = 在程度上的多少
which = relative pronoun introducing a relative clause defining the extent

The classification of leases is based on (how much risks and rewards...) = 租約的分類是基於 (有多少風險和回報...)

全句翻譯: (literally)

租約的分類是基於 在程度上有多少 因擁有租賃資產而產生的風險和回報 存在於出租人或承租人身上

2012-06-29 09:22:10 補充：
good Chinese translation:

租約分類是根據出租者或承租人因擁有出租物業而在回報及風險上所承擔的責任。

不知道為什麼the extent to which = how much，看這裡，要耐心地看到進階觀念

For easier understanding let’s divide the sentence into parts(1) Main clause 句子主句: The classification of leases is based on the extent to which risks and rewards lie with the lessor or the lessee.(2) Subordinate clause從句/子句: (which are) incidental to ownership of a leased asset, 因擁有出租物業而產生相関的(事物) The classification of leases = Leases are classified is based on = according to 根據the extent to which = the degree/ how far something is = 連用名詞組 a collocated noun group/ noun phrase lie with (somebody) = to somebody’s duty or responsibility 是某人的義務或責任
lie with the lessor or the lessee = the responsibility of the lessor or the lessee

= Leases are classified according to how far is the responsibility of the lessor or the lessee in relation to the ownership of a leased asset.
租約分類是根據出租者或承租人因擁有出租物業而在回報及風險上所承擔的責任。