Criteria to Generate a Standard Report Type

Lookup Relationships: 

• The "Allow Reporting" checkbox must be checked for custom objects (checking this box will also create a standard report type for the custom object)
• When a lookup relationship is created between two custom objects, a new standard report type will be created ("Custom Object 1 WITH Custom Object 2" report type)
• If there is a standard object with a lookup relationship to a custom object, a new standard report type will be created ("Standard Object AND Custom Object 1" report type)
• When a multi-level relationship is created involving more than 2 objects, a Custom Report Type is automatically created. These automatically-created types count toward the organization's custom report type limit. If the limit has already been reached, no additional Custom Report Type will be created. You can delete system-generated Custom Report Types if needed.

NOTE: There are no other scenarios in which lookup relationships will create a custom report type. If you find a need for a report type that is not system generated, please consider creating a Custom Report Type. More details can be found in this documentation: Create a Custom Report Type

Master-Detail Relationships:

• The "Allow Reporting" checkbox must be checked for custom objects (checking this box will also create a standard report type for the custom object)
• When the custom object is the "child" in any master-detail relationship, a new standard report type will be created ("Parent WITH Custom Object" report type)
• When there is a multi-level relationship (Master-Detail and/or Lookup relationships of 2 or 3 levels), a new report type will be created ("Master Object WITH Detail Object AND Lookup 1" report type)

NOTE: When a multi-level relationship is created (involving more than 2 objects), a Custom Report Type is automatically created. These DO count toward the organization's custom report type limit, and a Custom Report Type is not created if the organization's limit has already been reached. Additionally, it is possible to delete these system-generated custom report types.