# ASC 842-10-35: Leases — Overall — 35 Subsequent Measurement Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/842/10/#35-subsequent-measurement) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:fad716b912b1c18aa75b1eaec537f55466c103b4162f0086fb3a716b6d327d73 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 842-10-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/842/10/#35-subsequent-measurement) SEC content: no #### Lease Term and Purchase Options ##### [842-10-35-1](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:51bb295b7780fa3ae0743a8b22d230d5700d9558efbcee9374a343ec54570b74 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") shall reassess the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") or a lessee option to purchase the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") only if and at the point in time that any of the following occurs: 1. a There is a significant event or a significant change in circumstances that is within the control of the lessee that directly affects whether the lessee is reasonably certain to exercise or not to exercise an option to extend or terminate the [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") or to purchase the underlying asset. 2. b There is an event that is written into the [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") that obliges the lessee to exercise (or not to exercise) an option to extend or terminate the lease. 3. c The lessee elects to exercise an option even though the entity had previously determined that the lessee was not reasonably certain to do so. 4. d The lessee elects not to exercise an option even though the entity had previously determined that the lessee was reasonably certain to do so. ##### [842-10-35-2](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:18a1135ee46a0878d53134328e61d22fb147e544d38ca35330f3bc1def2fd3f7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. See paragraphs [842-10-55-28 through 55-29](https://asc.understandingaccounting.org/asc/842/10/#842-10-55-28) for implementation guidance on reassessing the lease term and lessee options to purchase the underlying asset. ##### [842-10-35-3](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:a8b7ca2fb3773ff48ec43cb988bb9ac1fc449cb37512aa0d6054a3b9bc831163 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall not reassess the lease term or a lessee option to purchase the underlying asset unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph [842-10-25-8](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-8). When a lessee exercises an option to extend the lease or purchase the underlying asset that the lessor previously determined the lessee was not reasonably certain to exercise or exercises an option to terminate the lease that the lessor previously determined the lessee was reasonably certain not to exercise, the lessor shall account for the exercise of that option in the same manner as a [lease modification](https://asc.understandingaccounting.org/glossary/l/#lease-modification "A change to the terms and conditions of a contract that results in a change in the scope of or the consideration for a lease (for example, a change to the terms and conditions of the contract that adds or terminates the right to use one or more underlying assets or extends or shortens the contractual lease term)."). #### Subsequent Measurement of the Lease Payments ##### [842-10-35-4](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-4) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:f2e5f9be09a3d4b25a3da897415e5f535e3bee5bd75bb92bd34c0a8ff324106d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessee](https://asc.understandingaccounting.org/glossary/l/#lessee "An entity that enters into a contract to obtain the right to use an underlying asset for a period of time in exchange for consideration.") shall remeasure the [lease payments](https://asc.understandingaccounting.org/glossary/l/#lease-payments "See paragraph 842-10-30-5 for what constitutes lease payments from the perspective of a lessee and a lessor.") if any of the following occur: 1. a The [lease](https://asc.understandingaccounting.org/glossary/l/#lease "A contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration.") is modified, and that modification is not accounted for as a separate [contract](https://asc.understandingaccounting.org/glossary/c/#contract "An agreement between two or more parties that creates enforceable rights and obligations.") in accordance with paragraph [842-10-25-8](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-8). 2. b A contingency upon which some or all of the [variable lease payments](https://asc.understandingaccounting.org/glossary/v/#variable-lease-payments "Payments made by a lessee to a lessor for the right to use an underlying asset that vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.") that will be paid over the remainder of the [lease term](https://asc.understandingaccounting.org/glossary/l/#lease-term "The noncancellable period for which a lessee has the right to use an underlying asset, together with all of the following: Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.") are based is resolved such that those payments now meet the definition of lease payments. For example, an event occurs that results in variable lease payments that were linked to the performance or use of the [underlying asset](https://asc.understandingaccounting.org/glossary/u/#underlying-asset "An asset that is the subject of a lease for which a right to use that asset has been conveyed to a lessee. The underlying asset could be a physically distinct portion of a single asset.") becoming fixed payments for the remainder of the lease term. However, a change in a reference index or a rate upon which some or all of the variable lease payments in the contract are based does not constitute the resolution of a contingency subject to (b) (see paragraph [842-10-35-5](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-5) for guidance on the remeasurement of variable lease payments that depend on an index or a rate). 3. c There is a change in any of the following: 1. 1 The lease term, as described in paragraph [842-10-35-1](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-1). A lessee shall determine the revised lease payments on the basis of the revised lease term. 2. 2 The assessment of whether the lessee is reasonably certain to exercise or not to exercise an option to purchase the underlying asset, as described in paragraph [842-10-35-1](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-1). A lessee shall determine the revised lease payments to reflect the change in the assessment of the purchase option. 3. 3 Amounts [probable](https://asc.understandingaccounting.org/glossary/p/#probable "The future event or events are likely to occur.") of being owed by the lessee under [residual value guarantees](https://asc.understandingaccounting.org/glossary/r/#residual-value-guarantee "A guarantee made to a lessor that the value of an underlying asset returned to the lessor at the end of a lease will be at least a specified amount."). A lessee shall determine the revised lease payments to reflect the change in amounts probable of being owed by the lessee under residual value guarantees. ##### [842-10-35-5](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-5) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:670a6c96d6ad696431b1bdcc55916f43339448b667437e1dc099b662f12ee807 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. When one or more of the events described in paragraph [842-10-35-4(a)](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-4) or (c) occur or when a contingency unrelated to a change in a reference index or rate under paragraph [842-10-35-4(b)](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-4) is resolved, variable lease payments that depend on an index or a rate shall be remeasured using the index or rate as of the date the remeasurement is required. ##### [842-10-35-6](https://asc.understandingaccounting.org/asc/842/10/#842-10-35-6) Pending content: no Source downloaded (UTC): 2026-09-10T01:56:03.256Z to 2026-09-10T01:56:03.256Z Record version: sha256:c4bad606ff9e67204542bab2dc67b90a8ccae02c1d1bded4b9b392ab274bf9fe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [lessor](https://asc.understandingaccounting.org/glossary/l/#lessor "An entity that enters into a contract to provide the right to use an underlying asset for a period of time in exchange for consideration.") shall not remeasure the lease payments unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph [842-10-25-8](https://asc.understandingaccounting.org/asc/842/10/#842-10-25-8).