{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/10/#55-implementation-guidance-and-illustrations","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"842","topic_title":"Leases","subtopic":"842-10","subtopic_title":"Overall","section":{"number":"55","label":"55 Implementation Guidance and Illustrations","anchor":"55-implementation-guidance-and-illustrations","is_sec":false,"groups":[{"block":null,"heading":"Implementation Guidance","paragraphs":[{"citation":"842-10-55-1","para":"55-1","html":"
The following flowchart depicts the decision process to follow in identifying whether a contract is or contains a lease. The flowchart does not include all of the guidance on identifying a lease in this Subtopic and is not intended as a substitute for the guidance on identifying a lease in this Subtopic.
","snippet":"The following flowchart depicts the decision process to follow in identifying whether a contract is or contains a lease. The flowchart does not include all of the guidance on identifying a lease in this Subtopic and is n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:833876de48d897f49b382eed4340184524a47791e56edb65ba2a2b1c8189c1a0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-2","para":"55-2","html":"
When determining lease classification, one reasonable approach to assessing the criteria in paragraphs 842-10-25-2(c) through (d) and 842-10-25-3(b)(1) would be to conclude:
  1. a
    Seventy-five percent or more of the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset.
  2. b
    A commencement date that falls at or near the end of the economic life of the underlying asset refers to a commencement date that falls within the last 25 percent of the total economic life of the underlying asset.
  3. c
    Ninety percent or more of the fair value of the underlying asset amounts to substantially all the fair value of the underlying asset.
","snippet":"When determining lease classification, one reasonable approach to assessing the criteria in paragraphs 842-10-25-2(c) through (d) and 842-10-25-3(b)(1) would be to conclude:\n(a) Seventy-five percent or more of the remain…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fc4d71f097502d7785a1eaada2368ebab135a1085d8857171594125ff226bbe2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-3","para":"55-3","html":"
In some cases, it may not be practicable for an entity to determine the fair value of an underlying asset. In the context of this Topic, practicable means that a reasonable estimate of fair value can be made without undue cost or effort. It is a dynamic concept; what is practicable for one entity may not be practicable for another, what is practicable in one period may not be practicable in another, and what is practicable for one underlying asset (or class of underlying asset) may not be practicable for another. In those cases in which it is not practicable for an entity to determine the fair value of an underlying asset, lease classification should be determined without consideration of the criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1).
","snippet":"In some cases, it may not be practicable for an entity to determine the fair value of an underlying asset. In the context of this Topic, practicable means that a reasonable estimate of fair value can be made without undu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc7aec066e98d22b7e323386789adeeb73d10fc7e2f257ad23728a83a0709647","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-4","para":"55-4","html":"
The criterion in paragraph 842-10-25-2(a) is met in leases that provide, upon the lessee's performance in accordance with the terms of the lease, that the lessor should execute and deliver to the lessee such documents (including, if applicable, a bill of sale) as may be required to release the underlying asset from the lease and to transfer ownership to the lessee.
","snippet":"The criterion in paragraph 842-10-25-2(a) is met in leases that provide, upon the lessee's performance in accordance with the terms of the lease, that the lessor should execute and deliver to the lessee such documents (i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d47db65442c53287c44e71445a70af059f7795347b970f3ed4e917c7e53fd95","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-5","para":"55-5","html":"
The criterion in paragraph 842-10-25-2(a) also is met in situations in which the lease requires the payment by the lessee of a nominal amount (for example, the minimum fee required by the statutory regulation to transfer ownership) in connection with the transfer of ownership.
","snippet":"The criterion in paragraph 842-10-25-2(a) also is met in situations in which the lease requires the payment by the lessee of a nominal amount (for example, the minimum fee required by the statutory regulation to transfer…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4ad47d2b9aa3bc3d3fa75e829e2202a06fac4d98622ac8f20eb038921c2bab0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-6","para":"55-6","html":"
A provision in a lease that ownership of the underlying asset is not transferred to the lessee if the lessee elects not to pay the specified fee (whether nominal or otherwise) to complete the transfer is an option to purchase the underlying asset. Such a provision does not satisfy the transfer-of-ownership criterion in paragraph 842-10-25-2(a).
","snippet":"A provision in a lease that ownership of the underlying asset is not transferred to the lessee if the lessee elects not to pay the specified fee (whether nominal or otherwise) to complete the transfer is an option to pur…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:12e9db412837dc468dcbc4c1e42149c1d6e9960c08bec36453025bab00e07c3c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-7","para":"55-7","html":"
In assessing whether an underlying asset has an alternative use to the lessor at the end of the lease term in accordance with paragraph 842-10-25-2(e), an entity should consider the effects of contractual restrictions and practical limitations on the lessor's ability to readily direct that asset for another use (for example, selling it or leasing it to an entity other than the lessee). A contractual restriction on a lessor's ability to direct an underlying asset for another use must be substantive for the asset not to have an alternative use to the lessor. A contractual restriction is substantive if it is enforceable. A practical limitation on a lessor's ability to direct an underlying asset for another use exists if the lessor would incur significant economic losses to direct the underlying asset for another use. A significant economic loss could arise because the lessor either would incur significant costs to rework the asset or would only be able to sell or re-lease the asset at a significant loss. For example, a lessor may be practically limited from redirecting assets that either have design specifications that are unique to the lessee or that are located in remote areas. The possibility of the contract with the customer being terminated is not a relevant consideration in assessing whether the lessor would be able to readily direct the underlying asset for another use.
","snippet":"In assessing whether an underlying asset has an alternative use to the lessor at the end of the lease term in accordance with paragraph 842-10-25-2(e), an entity should consider the effects of contractual restrictions an…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1cd55f82b4a7985db831b6cfadfabfb0992fed4b2a171037ee337f0e59bf8470","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-8","para":"55-8","html":"
When evaluating the lease classification criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1), the fair value of the underlying asset should be reduced by any related investment tax credit retained by the lessor and expected to be realized by the lessor.
","snippet":"When evaluating the lease classification criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1), the fair value of the underlying asset should be reduced by any related investment tax credit retained by the lessor a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53a2bbf4630e562b7520dc87e5382c4b0d88bc2aeba6932aa57f84a4bd689249","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-9","para":"55-9","html":"
Lessors may obtain residual value guarantees for a portfolio of underlying assets for which settlement is not solely based on the residual value of the individual underlying assets. In such cases, the lessor is economically assured of receiving a minimum residual value for a portfolio of assets that are subject to separate leases but not for each individual asset. Accordingly, when an asset has a residual value in excess of the “guaranteed” amount, that excess is offset against shortfalls in residual value that exist in other assets in the portfolio.
","snippet":"Lessors may obtain residual value guarantees for a portfolio of underlying assets for which settlement is not solely based on the residual value of the individual underlying assets. In such cases, the lessor is economica…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:39c04be0f70c69135930b162b1f8f4d40ad78e2ec303563c3e044ad9200c2cde","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-10","para":"55-10","html":"
Residual value guarantees of a portfolio of underlying assets preclude a lessor from determining the amount of the guaranteed residual value of any individual underlying asset within the portfolio. Consequently, no such amounts should be considered when evaluating the lease classification criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1).
","snippet":"Residual value guarantees of a portfolio of underlying assets preclude a lessor from determining the amount of the guaranteed residual value of any individual underlying asset within the portfolio. Consequently, no such …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0e347d72c08dd47fede477f3ffd473d8189a0a57aaae0704f7c16ae67ff1962","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-11","para":"55-11","html":"
In a business combination or an acquisition by a not-for-profit entity, the acquiring entity should retain the previous lease classification in accordance with this Subtopic unless there is a lease modification and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8. A joint venture formation accounted for in accordance with Subtopic 805-60 should apply the guidance in this paragraph applicable to the acquiring entity in a business combination. The joint venture should be viewed as analogous to the acquiring entity in a business combination, and any recognized businesses and/or assets should be viewed as analogous to an acquiree.
","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity should retain the previous lease classification in accordance with this Subtopic unless there is a lease modification and that …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7df1e9190e046cc3e4553021886b95a770be6192d620632e5e5e617ac5922376","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-12","para":"55-12","html":"
Except for leases between entities under common control accounted for in accordance with the practical expedient in paragraph 842-10-15-3A, leases between related parties should be classified in accordance with the lease classification criteria applicable to all other leases on the basis of the legally enforceable terms and conditions of the lease. Additionally, except for leases between entities under common control accounted for in accordance with paragraph 842-10-15-3A, the classification and accounting for the leases should be the same as for leases between unrelated parties in the separate financial statements of the related parties.
","snippet":"Except for leases between entities under common control accounted for in accordance with the practical expedient in paragraph 842-10-15-3A, leases between related parties should be classified in accordance with the lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de416a5e605818ae94e40730bdedd5b44cfc18011c81f7ea3d242afb23fd7faf","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-13","para":"55-13","html":"
Because of special provisions normally present in leases involving terminal space and other airport facilities owned by a governmental unit or authority, the economic life of such facilities for purposes of classifying a lease is essentially indeterminate. Likewise, it may not be practicable to determine the fair value of the underlying asset. If it is impracticable to determine the fair value of the underlying asset and such leases also do not provide for a transfer of ownership or a purchase option that the lessee is reasonably certain to exercise, they should be classified as operating leases. This guidance also applies to leases of other facilities owned by a governmental unit or authority in which the rights of the parties are essentially the same as in a lease of airport facilities. Examples of such leases may be those involving facilities at ports and bus terminals. The guidance in this paragraph is intended to apply to leases only if all of the following conditions are met:
  1. a
    The underlying asset is owned by a governmental unit or authority.
  2. b
    The underlying asset is part of a larger facility, such as an airport, operated by or on behalf of the lessor.
  3. c
    The underlying asset is a permanent structure or a part of a permanent structure, such as a building, that normally could not be moved to a new location.
  4. d
    The lessor, or in some circumstances a higher governmental authority, has the explicit right under the lease agreement or existing statutes or regulations applicable to the underlying asset to terminate the lease at any time during the lease term, such as by closing the facility containing the underlying asset or by taking possession of the facility.
  5. e
    The lease neither transfers ownership of the underlying asset to the lessee nor allows the lessee to purchase or otherwise acquire ownership of the underlying asset.
  6. f
    The underlying asset or equivalent asset in the same service area cannot be purchased or leased from a nongovernmental unit or authority. An equivalent asset in the same service area is an asset that would allow continuation of essentially the same service or activity as afforded by the underlying asset without any appreciable difference in economic results to the lessee.
","snippet":"Because of special provisions normally present in leases involving terminal space and other airport facilities owned by a governmental unit or authority, the economic life of such facilities for purposes of classifying a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7c5c0ab05a6de32b71e2f6277b8434c07e277f86c6de871ea99bff4d8d6bccd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-14","para":"55-14","html":"
Leases of underlying assets not meeting all of the conditions in paragraph 842-10-55-13 are subject to the same criteria for classifying leases under this Subtopic that are applicable to leases not involving government-owned property.
","snippet":"Leases of underlying assets not meeting all of the conditions in paragraph 842-10-55-13 are subject to the same criteria for classifying leases under this Subtopic that are applicable to leases not involving government-o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f555d5d09287499ec095ab7c2beb5ff8cd07fb023720c80a86dc658c1e9b6be9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-15","para":"55-15","html":"
A provision that requires lessee indemnification for environmental contamination, whether for environmental contamination caused by the lessee during its use of the underlying asset over the lease term or for preexisting environmental contamination, should not affect the classification of the lease.
","snippet":"A provision that requires lessee indemnification for environmental contamination, whether for environmental contamination caused by the lessee during its use of the underlying asset over the lease term or for preexisting…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94b48c9d4c6980ae7903908d5ba8e518ef8bb80cf7e55e46f0b835be3d72eccb","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-16","para":"55-16","html":"
In some situations, tax-exempt debt is issued to finance construction of a facility, such as a plant or hospital, that is transferred to a user of the facility by lease. A lease may serve as collateral for the guarantee of payments equivalent to those required to service the tax-exempt debt. Payments required by the terms of the lease are essentially the same, as to both amount and timing, as those required by the tax-exempt debt. A lease modification resulting from a refunding by the lessor of tax-exempt debt (including an advance refunding) should be accounted for in the same manner (that is, in accordance with paragraphs
842-10-25-8 through 25-18
) as any other lease modification. For example, if the perceived economic advantages of the refunding are passed through to the lessee in the form of reduced lease payments, the lessee should account for the modification in accordance with paragraph 842-10-25-12, while the lessor should account for the modification in accordance with the applicable guidance in paragraphs
842-10-25-15 through 25-17
.
","snippet":"In some situations, tax-exempt debt is issued to finance construction of a facility, such as a plant or hospital, that is transferred to a user of the facility by lease. A lease may serve as collateral for the guarantee …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9462f95589319ada19b179626ce1600166be9627c4787fa4b19d9287dd426648","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-17","para":"55-17","html":"
Under a master lease agreement, the lessee may gain control over the use of additional underlying assets during the term of the agreement. If the agreement specifies a minimum number of units or dollar value of equipment, the lessee obtaining control over the use of those additional underlying assets is not a lease modification. Rather, the entity (whether a lessee or a lessor) applies the guidance in paragraphs
842-10-15-28 through 15-42
when identifying the separate lease components and allocating the consideration in the contract to those components. Paragraph 842-10-55-22 explains that a master lease agreement may, therefore, result in multiple commencement dates.
","snippet":"Under a master lease agreement, the lessee may gain control over the use of additional underlying assets during the term of the agreement. If the agreement specifies a minimum number of units or dollar value of equipment…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b8d2962de2dd9f2ed6ee69322a3d4b0bd82d781dd4db356b03735c937429c97","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-18","para":"55-18","html":"
If the master lease agreement permits the lessee to gain control over the use of additional underlying assets during the term of the agreement but does not commit the lessee to doing so, the lessee's taking control over the use of an additional underlying asset should be accounted for as a lease modification in accordance with paragraphs
842-10-25-8 through 25-18
.
","snippet":"If the master lease agreement permits the lessee to gain control over the use of additional underlying assets during the term of the agreement but does not commit the lessee to doing so, the lessee's taking control over …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a417f5a39e587020a63f9b78ae104630a5cd69d243ae6f10d3172a569fce6d1c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-19","para":"55-19","html":"
In some lease arrangements, the lessor may make the underlying asset available for use by the lessee (for example, the lessee may take possession of or be given control over the use of the underlying asset) before it begins operations or makes lease payments under the terms of the lease. During this period, the lessee has the right to use the underlying asset and does so for the purpose of constructing a lessee asset (for example, leasehold improvements).
","snippet":"In some lease arrangements, the lessor may make the underlying asset available for use by the lessee (for example, the lessee may take possession of or be given control over the use of the underlying asset) before it beg…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c518cff75cfe39c969f6dc05a077befbccf06864a7b464aea1985a02ca4ee0b6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-20","para":"55-20","html":"
The contract may require the lessee to make lease payments only after construction is completed and the lessee begins operations. Alternatively, some contracts require the lessee to make lease payments when it takes possession of or is given control over the use of the underlying asset. The timing of when lease payments begin under the contract does not affect the commencement date of the lease.
","snippet":"The contract may require the lessee to make lease payments only after construction is completed and the lessee begins operations. Alternatively, some contracts require the lessee to make lease payments when it takes poss…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:718beade2d55556adefe7da83f726adb20925254c247e72e6d0433d8d4ce9083","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-21","para":"55-21","html":"
Lease costs (or income) associated with building and ground leases incurred (earned) during and after a construction period are for the right to use the underlying asset during and after construction of a lessee asset. There is no distinction between the right to use an underlying asset during a construction period and the right to use that asset after the construction period. Therefore, lease costs (or income) associated with ground or building leases that are incurred (earned) during a construction period should be recognized by the lessee (or lessor) in accordance with the guidance in Subtopics 842-20 and 842-30, respectively. That guidance does not address whether a lessee that accounts for the sale or rental of real estate projects under Topic 970 should capitalize rental costs associated with ground and building leases.
","snippet":"Lease costs (or income) associated with building and ground leases incurred (earned) during and after a construction period are for the right to use the underlying asset during and after construction of a lessee asset. T…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:14123b2ba2c0c5cefca7bdf516cbe9bc15f35be4c473fe1cf9707ca15ab70839","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-22","para":"55-22","html":"
There may be multiple commencement dates resulting from a master lease agreement. That is because a master lease agreement may cover a significant number of underlying assets, each of which are made available for use by the lessee on different dates. Although a master lease agreement may specify that the lessee must take a minimum number of units or dollar value of equipment, there will be multiple commencement dates unless all of the underlying assets subject to that minimum are made available for use by the lessee on the same date.
","snippet":"There may be multiple commencement dates resulting from a master lease agreement. That is because a master lease agreement may cover a significant number of underlying assets, each of which are made available for use by …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c1cf5570116d27392f64ba23fb8b6a3f1d151f22505398aade8c84c8240a072b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-23","para":"55-23","html":"
An entity should determine the noncancellable period of a lease when determining the lease term. When assessing the length of the noncancellable period of a lease, an entity should apply the definition of a contract and determine the period for which the contract is enforceable. A lease is no longer enforceable when both the lessee and the lessor each have the right to terminate the lease without permission from the other party with no more than an insignificant penalty.
","snippet":"An entity should determine the noncancellable period of a lease when determining the lease term. When assessing the length of the noncancellable period of a lease, an entity should apply the definition of a contract and …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:548e7d15b92ffffd2b97da58eb9ede7a60d1802f3a72e47a9eb2a48e98a9a0cb","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-24","para":"55-24","html":"
If only a lessee has the right to terminate a lease, that right is considered to be an option to terminate the lease available to the lessee that an entity considers when determining the lease term, as described in paragraph 842-10-30-1(b). If only a lessor has the right to terminate a lease, the lease term includes the period covered by the option to terminate the lease, as described in paragraph 842-10-30-1(c).
","snippet":"If only a lessee has the right to terminate a lease, that right is considered to be an option to terminate the lease available to the lessee that an entity considers when determining the lease term, as described in parag…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6520db96ff21ef3676bd526f0f226e2bcfb90448406f1123f491d9230bd61944","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-25","para":"55-25","html":"
The lease term begins at the commencement date and includes any rent-free periods provided to the lessee by the lessor.
","snippet":"The lease term begins at the commencement date and includes any rent-free periods provided to the lessee by the lessor.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c94199c7f769381b3ed4fa5fc4bcc4f022947f9a5188a83ba9988e988e1b4f73","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-26","para":"55-26","html":"
At the commencement date, an entity assesses whether the lessee is reasonably certain to exercise or not to exercise an option by considering all economic factors relevant to that assessment—contract-based, asset-based, market-based, and entity-based factors. An entity's assessment often will require the consideration of a combination of those factors because they are interrelated. Examples of economic factors to consider include, but are not limited to, any of the following:
  1. a
    Contractual terms and conditions for the optional periods compared with current market rates, such as:
    1. 1
      The amount of lease payments in any optional period
    2. 2
      The amount of any variable lease payments or other contingent payments, such as payments under termination penalties and residual value guarantees
    3. 3
      The terms and conditions of any options that are exercisable after initial optional periods (for example, the terms and conditions of a purchase option that is exercisable at the end of an extension period at a rate that is currently below market rates).
  2. b
    Significant leasehold improvements that are expected to have significant economic value for the lessee when the option to extend or terminate the lease or to purchase the underlying asset becomes exercisable.
  3. c
    Costs relating to the termination of the lease and the signing of a new lease, such as negotiation costs, relocation costs, costs of identifying another underlying asset suitable for the lessee's operations, or costs associated with returning the underlying asset in a contractually specified condition or to a contractually specified location.
  4. d
    The importance of that underlying asset to the lessee's operations, considering, for example, whether the underlying asset is a specialized asset and the location of the underlying asset.
","snippet":"At the commencement date, an entity assesses whether the lessee is reasonably certain to exercise or not to exercise an option by considering all economic factors relevant to that assessment—contract-based, asset-based, …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ffb26880e7d8cbf4df0b693e90639857a34a8fac791ebc0aedf6da9437356975","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-27","para":"55-27","html":"
The existence of a fiscal funding clause in a lease agreement requires an assessment of the likelihood of lease cancellation through exercise of the fiscal funding clause. If it is more than remote that the fiscal funding clause will be exercised, the lease term should include only those periods for which funding is reasonably certain.
","snippet":"The existence of a fiscal funding clause in a lease agreement requires an assessment of the likelihood of lease cancellation through exercise of the fiscal funding clause. If it is more than remote that the fiscal fundin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ebd7860e0ad16171b63561f479d845eb6f2856ff50af082bd4103ae2a03978df","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-28","para":"55-28","html":"
Examples of significant events or significant changes in circumstances that a lessee should consider in accordance with paragraph 842-10-35-1 include, but are not limited to, the following:
  1. a
    Constructing significant leasehold improvements that are expected to have significant economic value for the lessee when the option becomes exercisable
  2. b
    Making significant modifications or customizations to the underlying asset
  3. c
    Making a business decision that is directly relevant to the lessee's ability to exercise or not to exercise an option (for example, extending the lease of a complementary asset or disposing of an alternative asset)
  4. d
    Subleasing the underlying asset for a period beyond the exercise date of the option.
","snippet":"Examples of significant events or significant changes in circumstances that a lessee should consider in accordance with paragraph 842-10-35-1 include, but are not limited to, the following:\n(a) Constructing significant l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d982771db8794c459da2fa4618a4a3a5eefa48812a7914233c6b81a36f05ba6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-29","para":"55-29","html":"
A change in market-based factors (such as market rates to lease or purchase a comparable asset) should not, in isolation, trigger reassessment of the lease term or a lessee option to purchase the underlying asset.
","snippet":"A change in market-based factors (such as market rates to lease or purchase a comparable asset) should not, in isolation, trigger reassessment of the lease term or a lessee option to purchase the underlying asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:49269e3afe285c834aec14b3b9215ce70e1cd292d2611044bd05f281c63fd2f3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-30","para":"55-30","html":"
Lease incentives include both of the following:
  1. a
    Payments made to or on behalf of the lessee
  2. b
    Losses incurred by the lessor as a result of assuming a lessee's preexisting lease with a third party. In that circumstance, the lessor and the lessee should independently estimate any loss attributable to that assumption. For example, the lessee's estimate of the lease incentive could be based on a comparison of the new lease with the market rental rate available for similar underlying assets or the market rental rate from the same lessor without the lease assumption. The lessor should estimate any loss on the basis of the total remaining costs reduced by the expected benefits from the sublease for use of the assumed underlying asset.
","snippet":"Lease incentives include both of the following:\n(a) Payments made to or on behalf of the lessee\n(b) Losses incurred by the lessor as a result of assuming a lessee's preexisting lease with a third party. In that circumsta…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f875af2e07785bc524342ec2ea1d805bab8a72c74b482d1510464791ccd9cc5","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-31","para":"55-31","html":"
Lease payments include in substance fixed lease payments. In substance fixed payments are payments that may, in form, appear to contain variability but are, in effect, unavoidable. In substance fixed payments for a lessee or a lessor may include, for example, any of the following:
  1. a
    Payments that do not create genuine variability (such as those that result from clauses that do not have economic substance)
  2. b
    The lower of the payments to be made when a lessee has a choice about which set of payments it makes, although it must make at least one set of payments.
","snippet":"Lease payments include in substance fixed lease payments. In substance fixed payments are payments that may, in form, appear to contain variability but are, in effect, unavoidable. In substance fixed payments for a lesse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0865da09d4b6c5391ec0b74f6b00294b626a7536a5fec5908c74da49e74ef8a4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-32","para":"55-32","html":"
Paragraph 460-10-15-4(c) states that, except as provided in paragraph 460-10-15-7, the provisions of Subtopic 460-10 on guarantees apply to indemnification agreements (contracts) that contingently require an indemnifying party (guarantor) to make payments to an indemnified party (guaranteed party) based on changes in an underlying that is related to an asset, a liability, or an equity security of the indemnified party. Paragraph 460-10-55-23A provides related implementation guidance for a tax indemnification provided to a lessor.
","snippet":"Paragraph 460-10-15-4(c) states that, except as provided in paragraph 460-10-15-7, the provisions of Subtopic 460-10 on guarantees apply to indemnification agreements (contracts) that contingently require an indemnifying…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4dda76627624a0df1feca8a10499cb8ac810ee4c5c5a46763b81a7938d20a7b1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-33","para":"55-33","html":"
A lessor should evaluate a commitment to guarantee performance of the underlying asset or to effectively protect the lessee from obsolescence of the underlying asset in accordance with paragraphs
606-10-55-30 through 55-35
on warranties. If the lessor's commitment is more extensive than a typical product warranty, it might indicate that the commitment is providing a service to the lessee that should be accounted for as a nonlease component of the contract.
","snippet":"A lessor should evaluate a commitment to guarantee performance of the underlying asset or to effectively protect the lessee from obsolescence of the underlying asset in accordance with paragraphs 606-10-55-30 through 55-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:163c0fb47108a3274af0bce90c7858ef83d72c009f3f5d68d7e2cbd0639b6a41","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-34","para":"55-34","html":"
A lease provision requiring the lessee to make up a residual value deficiency that is attributable to damage, extraordinary wear and tear, or excessive usage is similar to variable lease payments in that the amount is not determinable at the commencement date. Such a provision does not constitute a lessee guarantee of the residual value.
","snippet":"A lease provision requiring the lessee to make up a residual value deficiency that is attributable to damage, extraordinary wear and tear, or excessive usage is similar to variable lease payments in that the amount is no…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8f667cb6c6630f6f280ca14c7371764757eed13b73ffc43c232b64897fbb12b6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-35","para":"55-35","html":"
If the lessor has the right to require the lessee to purchase the underlying asset by the end of the lease term, the stated purchase price is included in lease payments. That amount is, in effect, a guaranteed residual value that the lessee is obligated to pay on the basis of circumstances outside its control.
","snippet":"If the lessor has the right to require the lessee to purchase the underlying asset by the end of the lease term, the stated purchase price is included in lease payments. That amount is, in effect, a guaranteed residual v…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:053bf9d2cf0cdff3a36cb5bec16132ae8e57d6acaf5d121636d0116c235c0abe","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-36","para":"55-36","html":"
A residual value guarantee obtained by the lessee from an unrelated third party for the benefit of the lessor should not be used to reduce the amount of the lessee's lease payments under paragraph 842-10-30-5(f) except to the extent that the lessor explicitly releases the lessee from obligation, including the secondary obligation, which is if the guarantor defaults, a residual value deficiency must be made up. Amounts paid in consideration for a guarantee by an unrelated third party are executory costs and are not included in the lessee's lease payments.
","snippet":"A residual value guarantee obtained by the lessee from an unrelated third party for the benefit of the lessor should not be used to reduce the amount of the lessee's lease payments under paragraph 842-10-30-5(f) except t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0e6e6b719c91df4643e6a7573735737a8229eb5bfc836e70a9cd1ab901e2e2c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-37","para":"55-37","html":"
Obligations imposed by a lease agreement to return an underlying asset to its original condition if it has been modified by the lessee (for example, a requirement to remove a lessee-installed leasehold improvement) generally would not meet the definition of lease payments or variable lease payments and would be accounted for in accordance with Subtopic 410-20 on asset retirement and environmental obligations. In contrast, costs to dismantle and remove an underlying asset at the end of the lease term that are imposed by the lease agreement generally would be considered lease payments or variable lease payments.
","snippet":"Obligations imposed by a lease agreement to return an underlying asset to its original condition if it has been modified by the lessee (for example, a requirement to remove a lessee-installed leasehold improvement) gener…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e34a69444de010c9c060eadfb594b78eefec14d13834fa439a0f13b169f295e0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-38","para":"55-38","html":"
Some leases contain indemnification clauses that indemnify lessors on an after-tax basis for certain tax benefits that the lessor may lose if a change in the tax law precludes realization of those tax benefits. Although the indemnification payments may appear to meet the definition of variable lease payments, those payments are not of the nature normally expected to arise under variable lease payment provisions.
","snippet":"Some leases contain indemnification clauses that indemnify lessors on an after-tax basis for certain tax benefits that the lessor may lose if a change in the tax law precludes realization of those tax benefits. Although …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:412c46d2f9c24d7e3776362b415f5a28694d1ea64c65120d067898e27c4ca72b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-39","para":"55-39","html":"
Because of the close association of the indemnification payments to specific aspects of the tax law, any payments should be accounted for in a manner that recognizes the tax law association. The lease classification should not be changed.
","snippet":"Because of the close association of the indemnification payments to specific aspects of the tax law, any payments should be accounted for in a manner that recognizes the tax law association. The lease classification shou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6603f49502c30487666c906406061f99a75219d9015b0ba7207a28a341f9c70","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-40","para":"55-40","html":"
Paragraph 842-30-55-16 discusses a lessor's accounting for guarantee payments received.
","snippet":"Paragraph 842-30-55-16 discusses a lessor's accounting for guarantee payments received.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:362027538e8e83880cdec92db02bdc7495799c38e683ce7807a2fb95f8fbc569","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71b0592760bf67a150b1827c5cd832261b759cf3a3c4e3368ed2afc707a7fecc","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-10-55-41","para":"55-41","html":"
Examples 1 through 10 illustrate the identification of a lease.
","snippet":"Examples 1 through 10 illustrate the identification of a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ef128a4a129e35fa24248b1608a47e52e8c7f9c349b944edac069a1cd77617df","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-42","para":"55-42","html":"
A contract between Customer and a freight carrier (Supplier) provides Customer with the use of 10 rail cars of a particular type for 5 years. The contract specifies the rail cars; the cars are owned by Supplier. Customer determines when, where, and which goods are to be transported using the cars. When the cars are not in use, they are kept at Customer's premises. Customer can use the cars for another purpose (for example, storage) if it so chooses. However, the contract specifies that Customer cannot transport particular types of cargo (for example, explosives). If a particular car needs to be serviced or repaired, Supplier is required to substitute a car of the same type. Otherwise, and other than on default by Customer, Supplier cannot retrieve the cars during the five-year period.
","snippet":"A contract between Customer and a freight carrier (Supplier) provides Customer with the use of 10 rail cars of a particular type for 5 years. The contract specifies the rail cars; the cars are owned by Supplier. Customer…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4256c0d7cf4337659155f53237869c7af56397e887f054260ad329b5e95d658","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-43","para":"55-43","html":"
The contract also requires Supplier to provide an engine and a driver when requested by Customer. Supplier keeps the engines at its premises and provides instructions to the driver detailing Customer's requests to transport goods. Supplier can choose to use any one of a number of engines to fulfill each of Customer's requests, and one engine could be used to transport not only Customer's goods, but also the goods of other customers (for example, if other customers require the transport of goods to destinations close to the destination requested by Customer and within a similar timeframe, Supplier can choose to attach up to 100 rail cars to the engine).
","snippet":"The contract also requires Supplier to provide an engine and a driver when requested by Customer. Supplier keeps the engines at its premises and provides instructions to the driver detailing Customer's requests to transp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af7628e89c61f0a1192d1a8a774120a3000ad51cbc2096013b0af79259fa0586","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-44","para":"55-44","html":"
The contract contains leases of rail cars. Customer has the right to use 10 rail cars for 5 years.
","snippet":"The contract contains leases of rail cars. Customer has the right to use 10 rail cars for 5 years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b804bae7865ec67f922c017001db86097ed17b994e623004a5cba3af57636483","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-45","para":"55-45","html":"
There are 10 identified cars. The cars are explicitly specified in the contract. Once delivered to Customer, the cars can be substituted only when they need to be serviced or repaired. The engine used to transport the rail cars is not an identified asset because it is neither explicitly specified nor implicitly specified in the contract.
","snippet":"There are 10 identified cars. The cars are explicitly specified in the contract. Once delivered to Customer, the cars can be substituted only when they need to be serviced or repaired. The engine used to transport the ra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4f88de34cda7d9394b9cc7f46d0814f4930f97c5802f5ef9945fb9fb8f23264","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-46","para":"55-46","html":"
Customer has the right to control the use of the 10 rail cars throughout the 5-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the cars over the five-year period of use. Customer has exclusive use of the cars throughout the period of use, including when they are not being used to transport Customer's goods.
  2. b
    Customer has the right to direct the use of the cars. The contractual restrictions on the cargo that can be transported by the cars are protective rights of Supplier and define the scope of Customer's right to use the cars. Within the scope of its right of use defined in the contract, Customer makes the relevant decisions about how and for what purpose the cars are used by being able to decide when and where the rail cars will be used and which goods are transported using the cars. Customer also determines whether and how the cars will be used when not being used to transport its goods (for example, whether and when they will be used for storage). Customer has the right to change these decisions during the five-year period of use.
","snippet":"Customer has the right to control the use of the 10 rail cars throughout the 5-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the cars over the fiv…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b75d0df80ac8d3463bc7212b8963b290c0a257b71edb411c97a47e9acbae2c4e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-47","para":"55-47","html":"
Although having an engine and driver (controlled by Supplier) to transport the rail cars is essential to the efficient use of the cars, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the rail cars are used. Consequently, Supplier does not control the use of the cars during the period of use.
","snippet":"Although having an engine and driver (controlled by Supplier) to transport the rail cars is essential to the efficient use of the cars, Supplier's decisions in this regard do not give it the right to direct how and for w…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7ccfaef7df5dfb67929a0ad36985bc589a39829b852fec7fe4be84cf9f0095e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-48","para":"55-48","html":"
The contract between Customer and Supplier requires Supplier to transport a specified quantity of goods by using a specified type of rail car in accordance with a stated timetable for a period of five years. The timetable and quantity of goods specified are equivalent to Customer having the use of 10 rail cars for 5 years. Supplier provides the rail cars, driver, and engine as part of the contract. The contract states the nature and quantity of the goods to be transported (and the type of rail car to be used to transport the goods). Supplier has a large pool of similar cars that can be used to fulfill the requirements of the contract. Similarly, Supplier can choose to use any one of a number of engines to fulfill each of Customer's requests, and one engine could be used to transport not only Customer's goods, but also the goods of other customers. The cars and engines are stored at Supplier's premises when not being used to transport goods.
","snippet":"The contract between Customer and Supplier requires Supplier to transport a specified quantity of goods by using a specified type of rail car in accordance with a stated timetable for a period of five years. The timetabl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b86b05f99ba4a96799c7f3bb42f17481b9da66b82f3115c52d0b35c73b143b9b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-49","para":"55-49","html":"
The contract does not contain a lease of rail cars or of an engine.
","snippet":"The contract does not contain a lease of rail cars or of an engine.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:314ab8adca1d364fe9057da50a9ec4dd853dbe78257f64f38508efcb5fbce91c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-50","para":"55-50","html":"
The rail cars and the engines used to transport Customer's goods are not identified assets. Supplier has the substantive right to substitute the rail cars and engine because:
  1. a
    Supplier has the practical ability to substitute each car and the engine throughout the period of use. Alternative cars and engines are readily available to Supplier, and Supplier can substitute each car and the engine without Customer's approval.
  2. b
    Supplier would benefit economically from substituting each car and the engine. There would be minimal, if any, cost associated with substituting each car or the engine because the cars and engines are stored at Supplier's premises and Supplier has a large pool of similar cars and engines. Supplier benefits from substituting each car or the engine in contracts of this nature because substitution allows Supplier to, for example, (1) use cars or an engine to fulfill a task for which the cars or engine are already positioned to perform (for example, a task at a rail yard close to the point of origin) or (2) use cars or an engine that would otherwise be sitting idle because they are not being used by a customer.
","snippet":"The rail cars and the engines used to transport Customer's goods are not identified assets. Supplier has the substantive right to substitute the rail cars and engine because:\n(a) Supplier has the practical ability to sub…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:992313b5fe07aab015a258ff26cc1710fd2e6da60c148380e946fea924168280","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-51","para":"55-51","html":"
Accordingly, Customer does not direct the use and does not have the right to obtain substantially all of the economic benefits from use of an identified car or an engine. Supplier directs the use of the rail cars and engine by selecting which cars and engine are used for each particular delivery and obtains substantially all of the economic benefits from use of the rail cars and engine. Supplier is only providing freight capacity.
","snippet":"Accordingly, Customer does not direct the use and does not have the right to obtain substantially all of the economic benefits from use of an identified car or an engine. Supplier directs the use of the rail cars and eng…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d9843cbb26cb1a8d30686380bdce0d54d92c2869dae04ddf4c0624f2536f533","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-52","para":"55-52","html":"
A coffee company (Customer) enters into a contract with an airport operator (Supplier) to use a space in the airport to sell its goods for a three-year period. The contract states the amount of space and that the space may be located at any one of several boarding areas within the airport. Supplier has the right to change the location of the space allocated to Customer at any time during the period of use. There are minimal costs to Supplier associated with changing the space for the Customer: Customer uses a kiosk (that it owns) that can be moved easily to sell its goods. There are many areas in the airport that are available and that would meet the specifications for the space in the contract.
","snippet":"A coffee company (Customer) enters into a contract with an airport operator (Supplier) to use a space in the airport to sell its goods for a three-year period. The contract states the amount of space and that the space m…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:31f919e490379af2badbc5309f62237e0f7ed62e3477ced80161f601649b9866","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-53","para":"55-53","html":"
The contract does not contain a lease.
","snippet":"The contract does not contain a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b50a79b7fb30a1ce62df6eaf897950c775d79151918c5c2fee06ae38cf4ef08","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-54","para":"55-54","html":"
Although the amount of space Customer uses is specified in the contract, there is no identified asset. Customer controls its owned kiosk. However, the contract is for space in the airport, and this space can change at the discretion of Supplier. Supplier has the substantive right to substitute the space Customer uses because:
  1. a
    Supplier has the practical ability to change the space used by Customer throughout the period of use. There are many areas in the airport that meet the specifications for the space in the contract, and Supplier has the right to change the location of the space to other space that meets the specifications at any time without Customer's approval.
  2. b
    Supplier would benefit economically from substituting the space. There would be minimal cost associated with changing the space used by Customer because the kiosk can be moved easily. Supplier benefits from substituting the space in the airport because substitution allows Supplier to make the most effective use of the space at boarding areas in the airport to meet changing circumstances.
","snippet":"Although the amount of space Customer uses is specified in the contract, there is no identified asset. Customer controls its owned kiosk. However, the contract is for space in the airport, and this space can change at th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16dee4dd5e5493595a26ba8242aee26e3534b7118629a12eda312238a366ba82","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-55","para":"55-55","html":"
Customer enters into a 15-year contract with a utilities company (Supplier) for the right to use 3 specified, physically distinct dark fibers within a larger cable connecting Hong Kong to Tokyo. Customer makes the decisions about the use of the fibers by connecting each end of the fibers to its electronic equipment (for example, Customer “lights” the fibers and decides what data and how much data those fibers will transport). If the fibers are damaged, Supplier is responsible for the repairs and maintenance. Supplier owns extra fibers but can substitute those for Customer's fibers only for reasons of repairs, maintenance, or malfunction (and is obliged to substitute the fibers in these cases).
","snippet":"Customer enters into a 15-year contract with a utilities company (Supplier) for the right to use 3 specified, physically distinct dark fibers within a larger cable connecting Hong Kong to Tokyo. Customer makes the decisi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e114cb587e80cee44fc600489f2a59763dfe5677055d18a10ab2769aa2dae80","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-56","para":"55-56","html":"
The contract contains a lease of dark fibers. Customer has the right to use the 3 dark fibers for 15 years.
","snippet":"The contract contains a lease of dark fibers. Customer has the right to use the 3 dark fibers for 15 years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c62d2dd35e41ae1b9ba90adedd39cb81b9d251c3f15a985fe6de2c97bc153e2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-57","para":"55-57","html":"
There are three identified fibers. The fibers are explicitly specified in the contract and are physically distinct from other fibers within the cable. Supplier cannot substitute the fibers other than for reasons of repairs, maintenance, or malfunction.
","snippet":"There are three identified fibers. The fibers are explicitly specified in the contract and are physically distinct from other fibers within the cable. Supplier cannot substitute the fibers other than for reasons of repai…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:feef696daa9874531b1fa9dea5ccdfdcede6961682619275a2386320a19ab969","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-58","para":"55-58","html":"
Customer has the right to control the use of the fibers throughout the 15-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the fibers over the 15-year period of use. Customer has exclusive use of the fibers throughout the period of use.
  2. b
    Customer has the right to direct the use of the fibers. Customer makes the relevant decisions about how and for what purpose the fibers are used by deciding when and whether to light the fibers and when and how much output the fibers will produce (that is, what data and how much data those fibers will transport). Customer has the right to change these decisions during the 15-year period of use.
","snippet":"Customer has the right to control the use of the fibers throughout the 15-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the fibers over the 15-yea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:659253da9f865fbd8fcb776bac72f4fc58d3856d5ed7455d571f3f0a7a0b912b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-59","para":"55-59","html":"
Although Supplier's decisions about repairing and maintaining the fibers are essential to their efficient use, those decisions do not give Supplier the right to direct how and for what purpose the fibers are used. Consequently, Supplier does not control the use of the fibers during the period of use.
","snippet":"Although Supplier's decisions about repairing and maintaining the fibers are essential to their efficient use, those decisions do not give Supplier the right to direct how and for what purpose the fibers are used. Conseq…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0711beb91c3c47f8edb82892c222b4e7bc145c439ef40cabe4333ec67443bd64","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-60","para":"55-60","html":"
Customer enters into a 15-year contract with Supplier for the right to use a specified amount of capacity within a cable connecting Hong Kong to Tokyo. The specified amount is equivalent to Customer having the use of the full capacity of 3 strands within the cable (the cable contains 15 fibers with similar capacities). Supplier makes decisions about the transmission of data (that is, Supplier lights the fibers and makes decisions about which fibers are used to transmit Customer's traffic and about the electronic equipment that Supplier owns and connects to the fibers).
","snippet":"Customer enters into a 15-year contract with Supplier for the right to use a specified amount of capacity within a cable connecting Hong Kong to Tokyo. The specified amount is equivalent to Customer having the use of the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:116531066848ba475fea82b756f8b3ec5babfe782645c09671ccae6f457c30c6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-61","para":"55-61","html":"
The contract does not contain a lease.
","snippet":"The contract does not contain a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a3e3c796b3d4287b1a17cdd65b1ccb2e87a10acae91de014e1299e5a67a46c4f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-62","para":"55-62","html":"
Supplier makes all decisions about the transmission of its customers' data, which requires the use of only a portion of the capacity of the cable for each customer. The capacity portion that will be provided to Customer is not physically distinct from the remaining capacity of the cable and does not represent substantially all of the capacity of the cable. Consequently, Customer does not have the right to use an identified asset.
","snippet":"Supplier makes all decisions about the transmission of its customers' data, which requires the use of only a portion of the capacity of the cable for each customer. The capacity portion that will be provided to Customer …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3d91233a73ea89158dd6f06413c481e6412e5cd4d9623f5df880274038de812e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-63","para":"55-63","html":"
Customer enters into a contract with property owner (Supplier) to use Retail Unit A for a five-year period. Retail Unit A is part of a larger retail space with many retail units.
","snippet":"Customer enters into a contract with property owner (Supplier) to use Retail Unit A for a five-year period. Retail Unit A is part of a larger retail space with many retail units.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b3a90640c7e7abb5955b670ee9e332601217ebc667aa5d797a3047023e8908c4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-64","para":"55-64","html":"
Customer is granted the right to use Retail Unit A. Supplier can require Customer to relocate to another retail unit. In that case, Supplier is required to provide Customer with a retail unit of similar quality and specifications to Retail Unit A and to pay for Customer's relocation costs. Supplier would benefit economically from relocating Customer only if a major new tenant were to decide to occupy a large amount of retail space at a rate sufficiently favorable to cover the costs of relocating Customer and other tenants in the retail space that the new tenant will occupy. However, although it is possible that those circumstances will arise, at inception of the contract, it is not likely that those circumstances will arise. For example, whether a major new tenant will decide to lease a large amount of retail space at a rate that would be sufficiently favorable to cover the costs of relocating Customer is highly susceptible to factors outside Supplier's influence.
","snippet":"Customer is granted the right to use Retail Unit A. Supplier can require Customer to relocate to another retail unit. In that case, Supplier is required to provide Customer with a retail unit of similar quality and speci…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d69eb97d2910674af3b6fa472e8ba14f595f4e459f9226b07b50a49b9e3de7c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-65","para":"55-65","html":"
The contract requires Customer to use Retail Unit A to operate its well-known store brand to sell its goods during the hours that the larger retail space is open. Customer makes all of the decisions about the use of the retail unit during the period of use. For example, Customer decides on the mix of goods sold from the unit, the pricing of the goods sold, and the quantities of inventory held. Customer also controls physical access to the unit throughout the five-year period of use.
","snippet":"The contract requires Customer to use Retail Unit A to operate its well-known store brand to sell its goods during the hours that the larger retail space is open. Customer makes all of the decisions about the use of the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a6a6b63d6c56713c29d570d57a39d94e92b16e7046239c3b6a6c64b5dbfc005","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-66","para":"55-66","html":"
The contract requires Customer to make fixed payments to Supplier as well as variable payments that are a percentage of sales from Retail Unit A.
","snippet":"The contract requires Customer to make fixed payments to Supplier as well as variable payments that are a percentage of sales from Retail Unit A.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f49cbdfbfa9088f0073875f6c6e9ffe7dff4edf6eed381229eedeaee951bc0e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-67","para":"55-67","html":"
Supplier provides cleaning and security services as well as advertising services as part of the contract.
","snippet":"Supplier provides cleaning and security services as well as advertising services as part of the contract.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f13027b9c8e957a9cbf09e0108f459791090b3ab64e8a33cd90d7718c24c49e9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-68","para":"55-68","html":"
The contract contains a lease of retail space. Customer has the right to use Retail Unit A for five years.
","snippet":"The contract contains a lease of retail space. Customer has the right to use Retail Unit A for five years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bc693c435b42abbe86d929f583c9a2a0d1de70db709c167d39f2e0a3af38bbe4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-69","para":"55-69","html":"
Retail Unit A is an identified asset. It is explicitly specified in the contract. Supplier has the practical ability to substitute the retail unit, but could benefit economically from substitution only in specific circumstances. Supplier's substitution right is not substantive because, at inception of the contract, those circumstances are not considered likely to arise.
","snippet":"Retail Unit A is an identified asset. It is explicitly specified in the contract. Supplier has the practical ability to substitute the retail unit, but could benefit economically from substitution only in specific circum…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a707be741eb4147a77d754bde16cb0b2fee67c39068b7f96bc57974ef24a41ed","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-70","para":"55-70","html":"
Customer has the right to control the use of Retail Unit A throughout the five-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of Retail Unit A over the five-year period of use. Customer has exclusive use of Retail Unit A throughout the period of use. Although a portion of the cash flows derived from sales from Retail Unit A will flow from Customer to Supplier, this represents consideration that Customer pays Supplier for the right to use the retail unit. It does not prevent Customer from having the right to obtain substantially all of the economic benefits from use of Retail Unit A.
  2. b
    Customer has the right to direct the use of Retail Unit A. The contractual restrictions on the goods that can be sold from Retail Unit A and when Retail Unit A is open define the scope of Customer's right to use Retail Unit A. Within the scope of its right of use defined in the contract, Customer makes the relevant decisions about how and for what purpose Retail Unit A is used by being able to decide, for example, the mix of products that will be sold in the retail unit and the sale price for those products. Customer has the right to change these decisions during the five-year period of use.
","snippet":"Customer has the right to control the use of Retail Unit A throughout the five-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of Retail Unit A over th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e62506fe2f88ba84fb75ca24e09e46b6babfc85952ca1ca481b55a17d556aad","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-71","para":"55-71","html":"
Although cleaning, security, and advertising services are essential to the efficient use of Retail Unit A, Supplier's decisions in this regard do not give it the right to direct how and for what purpose Retail Unit A is used. Consequently, Supplier does not control the use of Retail Unit A during the period of use, and Supplier's decisions do not affect Customer's control of the use of Retail Unit A.
","snippet":"Although cleaning, security, and advertising services are essential to the efficient use of Retail Unit A, Supplier's decisions in this regard do not give it the right to direct how and for what purpose Retail Unit A is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92bf8c1d9f12f9d98b69a329069b7ea1c2b211d3aa34089dd277a45370d9b4a3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-72","para":"55-72","html":"
Customer enters into a contract with Supplier for the use of a truck for one week to transport cargo from New York to San Francisco. Supplier does not have substitution rights. Only cargo specified in the contract is permitted to be transported on this truck for the period of the contract. The contract specifies a maximum distance that the truck can be driven. Customer is able to choose the details of the journey (speed, route, rest stops, and so forth) within the parameters of the contract. Customer does not have the right to continue using the truck after the specified trip is complete.
","snippet":"Customer enters into a contract with Supplier for the use of a truck for one week to transport cargo from New York to San Francisco. Supplier does not have substitution rights. Only cargo specified in the contract is per…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d54b24dd65586d79b18179a1b840480049b5cade1d27482aa85fbdb11286677","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-73","para":"55-73","html":"
The cargo to be transported and the timing and location of pickup in New York and delivery in San Francisco are specified in the contract.
","snippet":"The cargo to be transported and the timing and location of pickup in New York and delivery in San Francisco are specified in the contract.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1e70d29e5468228cf524d2840f1897785cc823fb675e0b0a2a95cb240e8d49e2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-74","para":"55-74","html":"
Customer is responsible for driving the truck from New York to San Francisco.
","snippet":"Customer is responsible for driving the truck from New York to San Francisco.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c9434ae4ea002ea1882ff2597937785fddf4363fe7fe37bac7a36c276839f0e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-75","para":"55-75","html":"
The contract contains a lease of a truck. Customer has the right to use the truck for the duration of the specified trip.
","snippet":"The contract contains a lease of a truck. Customer has the right to use the truck for the duration of the specified trip.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d276dd413c69e821164772e577d0156c1e5ae4687b66b1dd21e10207047caa4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-76","para":"55-76","html":"
There is an identified asset. The truck is explicitly specified in the contract, and Supplier does not have the right to substitute the truck.
","snippet":"There is an identified asset. The truck is explicitly specified in the contract, and Supplier does not have the right to substitute the truck.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb6edc572aa3f2da3bc488a51332917f8322ce5b36bf0116062141bbf1a588e0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-77","para":"55-77","html":"
Customer has the right to control the use of the truck throughout the period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from the use of the truck over the period of use. Customer has exclusive use of the truck throughout the period of use.
  2. b
    Customer has the right to direct the use of the truck. How and for what purpose the truck will be used (that is, the transport of specified cargo from New York to San Francisco within a specified time frame) are predetermined in the contract. Customer directs the use of the truck because it has the right to operate the truck (for example, speed, route, and rest stops) throughout the period of use. Customer makes all of the decisions about the use of the truck that can be made during the period of use through its control of the operations of the truck.
","snippet":"Customer has the right to control the use of the truck throughout the period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from the use of the truck over the period of us…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8214f9a258317fb86cb6b11dd337af11b24077ebf3088be7e7a8bde375ab533b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-78","para":"55-78","html":"
Because the duration of the contract is one week, this lease meets the definition of a short-term lease.
","snippet":"Because the duration of the contract is one week, this lease meets the definition of a short-term lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b33bef44491b312e0ad8fff3ef3359fafd06525c89f026553496ec92347cdeca","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-79","para":"55-79","html":"
Customer enters into a contract with a ship owner (Supplier) for the transport of cargo from Rotterdam to Sydney on a specified ship. The ship is explicitly specified in the contract, and Supplier does not have substitution rights. The cargo will occupy substantially all of the capacity of the ship. The contract specifies the cargo to be transported on the ship and the dates of pickup and delivery.
","snippet":"Customer enters into a contract with a ship owner (Supplier) for the transport of cargo from Rotterdam to Sydney on a specified ship. The ship is explicitly specified in the contract, and Supplier does not have substitut…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:be5f26f1ad3ca252f2887d85e6fa2de7039db97b10603e4d6ddc0e0407fbf2d6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-80","para":"55-80","html":"
Supplier operates and maintains the ship and is responsible for the safe passage of the cargo onboard the ship. Customer is prohibited from hiring another operator for the ship or operating the ship itself during the term of the contract.
","snippet":"Supplier operates and maintains the ship and is responsible for the safe passage of the cargo onboard the ship. Customer is prohibited from hiring another operator for the ship or operating the ship itself during the ter…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8bc6fb8611b5c70c9f9aa0044abcc49d9697e4553bfebcca755347b5120e3846","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-81","para":"55-81","html":"
The contract does not contain a lease.
","snippet":"The contract does not contain a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c718f8ea0e4463d7de5a2991545130e1c79205394308048f268b3825bb4e1c11","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-82","para":"55-82","html":"
There is an identified asset. The ship is explicitly specified in the contract, and Supplier does not have the right to substitute that specified ship.
","snippet":"There is an identified asset. The ship is explicitly specified in the contract, and Supplier does not have the right to substitute that specified ship.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8a21d91c5769d34906c0a140dddafcdd36bd7b7ea24cba9db1aaa99112edaaf3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-83","para":"55-83","html":"
Customer has the right to obtain substantially all of the economic benefits from use of the ship over the period of use. Its cargo will occupy substantially all of the capacity of the ship, thereby preventing other parties from obtaining economic benefits from use of the ship.
","snippet":"Customer has the right to obtain substantially all of the economic benefits from use of the ship over the period of use. Its cargo will occupy substantially all of the capacity of the ship, thereby preventing other parti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b42235119d76fa086d517343eed9ec0c9729f1b953b75d73be775bc91758b82e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-84","para":"55-84","html":"
However, Customer does not have the right to control the use of the ship because it does not have the right to direct its use. Customer does not have the right to direct how and for what purpose the ship is used. How and for what purpose the ship will be used (that is, the transport of specified cargo from Rotterdam to Sydney within a specified time frame) are predetermined in the contract. Customer has no right to change how and for what purpose the ship is used during the period of use. Customer has no other decision-making rights about the use of the ship during the period of use (for example, it does not have the right to operate the ship) and did not design the ship. Customer has the same rights regarding the use of the ship as if it were one of multiple customers transporting cargo on the ship.
","snippet":"However, Customer does not have the right to control the use of the ship because it does not have the right to direct its use. Customer does not have the right to direct how and for what purpose the ship is used. How and…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10f19e31c27cae816e156c79f01fb7ef0e158fea554524893048d1a4abce9359","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-85","para":"55-85","html":"
Customer enters into a contract with Supplier for the use of a specified ship for a five-year period. The ship is explicitly specified in the contract, and Supplier does not have substitution rights.
","snippet":"Customer enters into a contract with Supplier for the use of a specified ship for a five-year period. The ship is explicitly specified in the contract, and Supplier does not have substitution rights.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13dbe3d20e43e8a479705f1defdcdce8bf144d2cc64a4ad4549d3b0db54ea398","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-86","para":"55-86","html":"
Customer decides what cargo will be transported and whether, when, and to which ports the ship will sail, throughout the five-year period of use, subject to restrictions specified in the contract. Those restrictions prevent Customer from sailing the ship into waters at a high risk of piracy or carrying hazardous materials as cargo.
","snippet":"Customer decides what cargo will be transported and whether, when, and to which ports the ship will sail, throughout the five-year period of use, subject to restrictions specified in the contract. Those restrictions prev…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:491ed08b79a7fb03a0b5b0595ab843a14542788036b600acd04358a8285ad3fe","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-87","para":"55-87","html":"
Supplier operates and maintains the ship and is responsible for the safe passage of the cargo onboard the ship. Customer is prohibited from hiring another operator for the ship or operating the ship itself during the term of the contract.
","snippet":"Supplier operates and maintains the ship and is responsible for the safe passage of the cargo onboard the ship. Customer is prohibited from hiring another operator for the ship or operating the ship itself during the ter…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bcd90d3880b37d34034741db22e39ebd3a2eae768fd293d9c04886e38073b7d1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-88","para":"55-88","html":"
The contract contains a lease. Customer has the right to use the ship for five years.
","snippet":"The contract contains a lease. Customer has the right to use the ship for five years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a377515d12dd561f08f9bcd3ec90c9185fe8ab37fd293cec67d4f2b31ed0007","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-89","para":"55-89","html":"
There is an identified asset. The ship is explicitly specified in the contract, and Supplier does not have the right to substitute that specified ship.
","snippet":"There is an identified asset. The ship is explicitly specified in the contract, and Supplier does not have the right to substitute that specified ship.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cccf039129533400db4573c9e9a1fe9fddd7e372c6d398353e977d1a32ccd6f4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-90","para":"55-90","html":"
Customer has the right to control the use of the ship throughout the five-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the ship over the five-year period of use. Customer has exclusive use of the ship throughout the period of use.
  2. b
    Customer has the right to direct the use of the ship. The contractual restrictions about where the ship can sail and the cargo to be transported by the ship define the scope of Customer's right to use the ship. They are protective rights that protect Supplier's investment in the ship and Supplier's personnel. Within the scope of its right of use, Customer makes the relevant decisions about how and for what purpose the ship is used throughout the five-year period of use because it decides whether, where, and when the ship sails, as well as the cargo it will transport. Customer has the right to change these decisions throughout the five-year period of use.
","snippet":"Customer has the right to control the use of the ship throughout the five-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the ship over the five-yea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d8f4f0063469336359bb2551588ddf1bb1db2b26bbe7aed29975a2876cd56fa7","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-91","para":"55-91","html":"
Although the operation and maintenance of the ship are essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the ship is used. Instead, Supplier's decisions are dependent on Customer's decisions about how and for what purpose the ship is used.
","snippet":"Although the operation and maintenance of the ship are essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the ship is used. Instead, Supplier's…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5fef20ff09556b52ee70637d92e5cddff863cc9db86b64e0447bdbff66eaa7a0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-92","para":"55-92","html":"
Customer enters into a contract with an aircraft owner (Supplier) for the use of an explicitly specified aircraft for a two-year period. The contract details the interior and exterior specifications for the aircraft.
","snippet":"Customer enters into a contract with an aircraft owner (Supplier) for the use of an explicitly specified aircraft for a two-year period. The contract details the interior and exterior specifications for the aircraft.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3240f387f05dae1fdbc4dc0efc427ed5d521ce1807c257ba55baa2df1e850698","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-93","para":"55-93","html":"
There are contractual and legal restrictions in the contract on where the aircraft can fly. Subject to those restrictions, Customer determines where and when the aircraft will fly and which passengers and cargo will be transported on the aircraft.
","snippet":"There are contractual and legal restrictions in the contract on where the aircraft can fly. Subject to those restrictions, Customer determines where and when the aircraft will fly and which passengers and cargo will be t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f0fec363505f58b223115c3bf081ac915ae3406dafd49182412039710a22eb88","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-94","para":"55-94","html":"
Supplier is responsible for operating the aircraft, using its own crew. Customer is prohibited from hiring another operator for the aircraft or operating the aircraft itself during the term of the contract.
","snippet":"Supplier is responsible for operating the aircraft, using its own crew. Customer is prohibited from hiring another operator for the aircraft or operating the aircraft itself during the term of the contract.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:45e88fb58128df3c1975fad46edcc8f9f41f8ea51337605b3c93e5253cac73cd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-95","para":"55-95","html":"
Supplier is permitted to substitute the aircraft at any time during the two-year period and must substitute the aircraft if it is not working. Any substitute aircraft must meet the interior and exterior specifications in the contract. There are significant costs involved in outfitting an aircraft in Supplier's fleet to meet Customer's specifications.
","snippet":"Supplier is permitted to substitute the aircraft at any time during the two-year period and must substitute the aircraft if it is not working. Any substitute aircraft must meet the interior and exterior specifications in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:07569fd15b4b6064a2927ae6c6f3a797fbbe457e95d48c00d42259a791100c59","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-96","para":"55-96","html":"
The contract contains a lease. Customer has the right to use the aircraft for two years.
","snippet":"The contract contains a lease. Customer has the right to use the aircraft for two years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:009835eeb0dd0dcf3b481c25f5e96702f038bed695a0e3e377abdbb785049116","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-97","para":"55-97","html":"
There is an identified asset. The aircraft is explicitly specified in the contract, and although Supplier can substitute the aircraft, its substitution right is not substantive. Supplier's substitution right is not substantive because of the significant costs involved in outfitting another aircraft to meet the specifications required by the contract such that Supplier is not expected to benefit economically from substituting the aircraft.
","snippet":"There is an identified asset. The aircraft is explicitly specified in the contract, and although Supplier can substitute the aircraft, its substitution right is not substantive. Supplier's substitution right is not subst…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6cfa343f5f1d2f377138763f770884ec992cff52322333271502beea2e71a88e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-98","para":"55-98","html":"
Customer has the right to control the use of the aircraft throughout the two-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the aircraft over the two-year period of use. Customer has exclusive use of the aircraft throughout the period of use.
  2. b
    Customer has the right to direct the use of the aircraft. The restrictions on where the aircraft can fly define the scope of Customer's right to use the aircraft. Within the scope of its right of use, Customer makes the relevant decisions about how and for what purpose the aircraft is used throughout the two-year period of use because it decides whether, where, and when the aircraft travels as well as the passengers and cargo it will transport. Customer has the right to change these decisions throughout the two-year period of use.
","snippet":"Customer has the right to control the use of the aircraft throughout the two-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the aircraft over the t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e5a4175b21354e7da830391c8c0c5eb6a7ca2568e1adb99822155c26b6b470bf","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-99","para":"55-99","html":"
Although the operation of the aircraft is essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the aircraft is used. Consequently, Supplier does not control the use of the aircraft during the period of use, and Supplier's decisions do not affect Customer's control of the use of the aircraft.
","snippet":"Although the operation of the aircraft is essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the aircraft is used. Consequently, Supplier does …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:94560e9d601190b5f0e9b9259fae33445f33aabba4c1fba31e4c84b6062194c7","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-100","para":"55-100","html":"
Customer enters into a contract with a manufacturer (Supplier) to purchase a particular type, quality, and quantity of shirts for a three-year period. The type, quality, and quantity of shirts are specified in the contract.
","snippet":"Customer enters into a contract with a manufacturer (Supplier) to purchase a particular type, quality, and quantity of shirts for a three-year period. The type, quality, and quantity of shirts are specified in the contra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a3cce3a7065fcb0e80a83a052dadaf113152a1e132e3bd3df1475030c9148ae","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-101","para":"55-101","html":"
Supplier has only one factory that can meet the needs of Customer. Supplier is unable to supply the shirts from another factory or source the shirts from a third-party supplier. The capacity of the factory exceeds the output for which Customer has contracted (that is, Customer has not contracted for substantially all of the capacity of the factory).
","snippet":"Supplier has only one factory that can meet the needs of Customer. Supplier is unable to supply the shirts from another factory or source the shirts from a third-party supplier. The capacity of the factory exceeds the ou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:edf0553dc05261bccc64ca33eb2a2ed568ef5c60f4ad7dbd74dba79c318edb88","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-102","para":"55-102","html":"
Supplier makes all decisions about the operations of the factory, including the production level at which to run the factory and which customer contracts to fulfill with the output of the factory that is not used to fulfill Customer's contract.
","snippet":"Supplier makes all decisions about the operations of the factory, including the production level at which to run the factory and which customer contracts to fulfill with the output of the factory that is not used to fulf…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:810a415d2477c52e975099beb697a3949796120a50b3933d1cac563f39f34c60","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-103","para":"55-103","html":"
The contract does not contain a lease.
","snippet":"The contract does not contain a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16d8f43ac6fd77936882bdd3d4777aa5df03cbe3502b19c911abc27c59809df3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-104","para":"55-104","html":"
The factory is an identified asset. The factory is implicitly specified because Supplier can fulfill the contract only through the use of this asset.
","snippet":"The factory is an identified asset. The factory is implicitly specified because Supplier can fulfill the contract only through the use of this asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e7234fe28a0690122aaa4fa8d763ef0b060519dbc3dfdb15ae050642a0b64a8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-105","para":"55-105","html":"
However, Customer does not control the use of the factory because it does not have the right to obtain substantially all of the economic benefits from use of the factory. This is because Supplier could decide to use the factory to fulfill other customer contracts during the period of use.
","snippet":"However, Customer does not control the use of the factory because it does not have the right to obtain substantially all of the economic benefits from use of the factory. This is because Supplier could decide to use the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:437f6e8f855f5b70013450bd084b33b6a1d46fe88ae477173f755a66d4fc77e9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-106","para":"55-106","html":"
Customer also does not control the use of the factory because it does not have the right to direct the use of the factory. Customer does not have the right to direct how and for what purpose the factory is used during the three-year period of use. Customer's rights are limited to specifying output from the factory in the contract with Supplier. Customer has the same rights regarding the use of the factory as other customers purchasing shirts from the factory. Supplier has the right to direct the use of the factory because Supplier can decide how and for what purpose the factory is used (that is, Supplier has the right to decide the production level at which to run the factory and which customer contracts to fulfill with the output produced).
","snippet":"Customer also does not control the use of the factory because it does not have the right to direct the use of the factory. Customer does not have the right to direct how and for what purpose the factory is used during th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e81165da54dc2244f6cc73d0bdf65179738d56864a8433f8feee1335a8d58fe0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-107","para":"55-107","html":"
Either the fact that Customer does not have the right to obtain substantially all of the economic benefits from use of the factory or the fact that Customer does not have the right to direct the use of the factory would be sufficient in isolation to conclude that Customer does not control the use of the factory.
","snippet":"Either the fact that Customer does not have the right to obtain substantially all of the economic benefits from use of the factory or the fact that Customer does not have the right to direct the use of the factory would …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5725fff5b2515703fc531b6a540e8e32cc6070c47dacf4d9db1395594f980bf9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-108","para":"55-108","html":"
A utility company (Customer) enters into a contract with a power company (Supplier) to purchase all of the electricity produced by a new solar farm for 20 years. The solar farm is explicitly specified in the contract, and Supplier has no substitution rights. The solar farm is owned by Supplier, and the energy cannot be provided to Customer from another asset. Customer designed the solar farm before it was constructed—Customer hired experts in solar energy to assist in determining the location of the farm and the engineering of the equipment to be used. Supplier is responsible for building the solar farm to Customer's specifications and then operating and maintaining it. There are no decisions to be made about whether, when, or how much electricity will be produced because the design of the asset has predetermined these decisions. Supplier will receive tax credits relating to the construction and ownership of the solar farm, while Customer receives renewable energy credits that accrue from use of the solar farm.
","snippet":"A utility company (Customer) enters into a contract with a power company (Supplier) to purchase all of the electricity produced by a new solar farm for 20 years. The solar farm is explicitly specified in the contract, an…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:00757a92d6d604f9775b4aebf7828450d1f2cf3c57f480964a4a66138a00570c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-109","para":"55-109","html":"
The contract contains a lease. Customer has the right to use the solar farm for 20 years.
","snippet":"The contract contains a lease. Customer has the right to use the solar farm for 20 years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8126bd5575656f711ab5d58b4fc49a367b6ead86768ba215230da52c0f4b3e87","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-110","para":"55-110","html":"
There is an identified asset because the solar farm is explicitly specified in the contract, and Supplier does not have the right to substitute the specified solar farm.
","snippet":"There is an identified asset because the solar farm is explicitly specified in the contract, and Supplier does not have the right to substitute the specified solar farm.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e6b1f78134717b7ae3368df54a607f97f20ba1e795869b37d42eab4c17f29be","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-111","para":"55-111","html":"
Customer has the right to control the use of the solar farm throughout the 20-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the solar farm over the 20-year period of use. Customer has exclusive use of the solar farm; it takes all of the electricity produced by the farm over the 20-year period of use as well as the renewable energy credits that are a by-product from use of the solar farm. Although Supplier will be receiving economic benefits from the solar farm in the form of tax credits, those economic benefits relate to the ownership of the solar farm rather than the use of the solar farm and, thus, are not considered in this assessment.
  2. b
    Customer has the right to direct the use of the solar farm. Neither Customer nor Supplier decides how and for what purpose the solar farm is used during the period of use because those decisions are predetermined by the design of the asset (that is, the design of the solar farm has, in effect, programmed into the asset any relevant decision-making rights about how and for what purpose the solar farm is used throughout the period of use). Customer does not operate the solar farm; Supplier makes the decisions about the operation of the solar farm. However, Customer's design of the solar farm has given it the right to direct the use of the farm (as described in paragraph 842-10-15-20(b)(2)). Because the design of the solar farm has predetermined how and for what purpose the asset will be used throughout the period of use, Customer's control over that design is substantively no different from Customer controlling those decisions.
","snippet":"Customer has the right to control the use of the solar farm throughout the 20-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the solar farm over th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6fdee8c181d906f90258e9f490bb052ac2158e796ee96d09b4bfad323097bd2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-112","para":"55-112","html":"
Customer enters into a contract with Supplier to purchase all of the power produced by an explicitly specified power plant for three years. The power plant is owned and operated by Supplier. Supplier is unable to provide power to Customer from another plant. The contract sets out the quantity and timing of power that the power plant will produce throughout the period of use, which cannot be changed in the absence of extraordinary circumstances (for example, emergency situations). Supplier operates and maintains the plant on a daily basis in accordance with industry-approved operating practices. Supplier designed the power plant when it was constructed some years before entering into the contract with Customer; Customer had no involvement in that design.
","snippet":"Customer enters into a contract with Supplier to purchase all of the power produced by an explicitly specified power plant for three years. The power plant is owned and operated by Supplier. Supplier is unable to provide…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ee033a97bf9b5f1d3657b63254345f58d84439e4620099972e9b02f5e16391c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-113","para":"55-113","html":"
The contract does not contain a lease.
","snippet":"The contract does not contain a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe8b10e6a9a350fdb09beef6f1ca630d2b3c8ed179b1fc883cb2dfef4351aea8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-114","para":"55-114","html":"
There is an identified asset because the power plant is explicitly specified in the contract, and Supplier does not have the right to substitute the specified plant.
","snippet":"There is an identified asset because the power plant is explicitly specified in the contract, and Supplier does not have the right to substitute the specified plant.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea695e420b8c3656887d1a47e4664e9f48f67d0ca23903ba2b6c7b04a48e1da2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-115","para":"55-115","html":"
Customer has the right to obtain substantially all of the economic benefits from use of the identified power plant over the three-year period of use. Customer will take all of the power produced by the power plant over the three-year term of the contract.
","snippet":"Customer has the right to obtain substantially all of the economic benefits from use of the identified power plant over the three-year period of use. Customer will take all of the power produced by the power plant over t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e03adb94d0e437a32727ec5432482d32cf90e40e8556f8de332ef1f235e7d725","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-116","para":"55-116","html":"
However, Customer does not have the right to control the use of the power plant because it does not have the right to direct its use. Customer does not have the right to direct how and for what purpose the plant is used. How and for what purpose the plant is used (that is, whether, when, and how much power the plant will produce) are predetermined in the contract. Customer has no right to change how and for what purpose the plant is used during the period of use, nor does it have any other decision-making rights about the use of the power plant during the period of use (for example, it does not operate the power plant) and did not design the plant. Supplier is the only party that can make decisions about the plant during the period of use by making the decisions about how the plant is operated and maintained. Customer has the same rights regarding the use of the plant as if it were one of many customers obtaining power from the plant.
","snippet":"However, Customer does not have the right to control the use of the power plant because it does not have the right to direct its use. Customer does not have the right to direct how and for what purpose the plant is used.…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53a683e36b36ace9160bed99a97fa5a0cfa35e00f0d9efb12d142c9dfd38b47d","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-117","para":"55-117","html":"
Customer enters into a contract with Supplier to purchase all of the power produced by an explicitly specified power plant for 10 years. The contract states that Customer has rights to all of the power produced by the plant (that is, Supplier cannot use the plant to fulfill other contracts).
","snippet":"Customer enters into a contract with Supplier to purchase all of the power produced by an explicitly specified power plant for 10 years. The contract states that Customer has rights to all of the power produced by the pl…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c21e60a65949c3e61bede4e934e602f77ffe8a5f97bfa5329f48a1eec06687c1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-118","para":"55-118","html":"
Customer issues instructions to Supplier about the quantity and timing of the delivery of power. If the plant is not producing power for Customer, it does not operate.
","snippet":"Customer issues instructions to Supplier about the quantity and timing of the delivery of power. If the plant is not producing power for Customer, it does not operate.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:80a25bda79fff6b4fbca37648c84471e1d537715e7f1488f66627c6305014fff","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-119","para":"55-119","html":"
Supplier operates and maintains the plant on a daily basis in accordance with industry-approved operating practices.
","snippet":"Supplier operates and maintains the plant on a daily basis in accordance with industry-approved operating practices.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7bca78f9adb82ad9da7883736af7f33b2cb4bb27c32ec931d1e5d71dafbdb4b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-120","para":"55-120","html":"
The contract contains a lease. Customer has the right to use the power plant for 10 years.
","snippet":"The contract contains a lease. Customer has the right to use the power plant for 10 years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8403f0b35588f968b60c11ccb8614e0c8094ed9c0170b88eca8d6dfdca3fb0dd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-121","para":"55-121","html":"
There is an identified asset. The power plant is explicitly specified in the contract, and Supplier does not have the right to substitute the specified plant.
","snippet":"There is an identified asset. The power plant is explicitly specified in the contract, and Supplier does not have the right to substitute the specified plant.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2e2d92c14ff13747cd66c166daa43079a1f6f489ddfe19f97c294b6fca1a28d","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-122","para":"55-122","html":"
Customer has the right to control the use of the power plant throughout the 10-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the power plant over the 10-year period of use. Customer has exclusive use of the power plant; it has rights to all of the power produced by the power plant throughout the 10-year period of use.
  2. b
    Customer has the right to direct the use of the power plant. Customer makes the relevant decisions about how and for what purpose the power plant is used because it has the right to determine whether, when, and how much power the plant will produce (that is, the timing and quantity, if any, of power produced) throughout the period of use. Because Supplier is prevented from using the power plant for another purpose, Customer's decision making about the timing and quantity of power produced, in effect, determines when and whether the plant produces output.
","snippet":"Customer has the right to control the use of the power plant throughout the 10-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the power plant over …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c41fbdc11b633069bda3861119d344a8de6044d676d78d26b569cef3c7052c03","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-123","para":"55-123","html":"
Although the operation and maintenance of the power plant are essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the power plant is used. Consequently, Supplier does not control the use of the power plant during the period of use. Instead, Supplier's decisions are dependent on Customer's decisions about how and for what purpose the power plant is used.
","snippet":"Although the operation and maintenance of the power plant are essential to its efficient use, Supplier's decisions in this regard do not give it the right to direct how and for what purpose the power plant is used. Conse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7a5141fbc202a86fcc0be30c886d4f4148165780c25c64c535828fa2fc22034","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-124","para":"55-124","html":"
Customer enters into a contract with a telecommunications company (Supplier) for network services for two years. The contract requires Supplier to supply network services that meet a specified quality level. To provide the services, Supplier installs and configures servers at Customer's premises; Supplier determines the speed and quality of data transportation in the network using the servers. Supplier can reconfigure or replace the servers when needed to continuously provide the quality of network services defined in the contract. Customer does not operate the servers or make any significant decisions about their use.
","snippet":"Customer enters into a contract with a telecommunications company (Supplier) for network services for two years. The contract requires Supplier to supply network services that meet a specified quality level. To provide t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6921a0829960239c48ce76f8d5586655a39ba27df581a739fe2785d0ecd5aaf6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-125","para":"55-125","html":"
The contract does not contain a lease. Instead, the contract is a service contract in which Supplier uses the equipment to meet the level of network services determined by Customer.
","snippet":"The contract does not contain a lease. Instead, the contract is a service contract in which Supplier uses the equipment to meet the level of network services determined by Customer.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6ebef6e7a60b2109d009494a16b2b3e9ff819ae6209e0add7ef5a15f17f9c959","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-126","para":"55-126","html":"
Customer does not control the use of the servers because Customer's only decision-making rights relate to deciding on the level of network services (the output of the servers) before the period of use—the level of network services cannot be changed during the period of use without modifying the contract. For example, even though Customer produces the data to be transported, that activity does not directly affect the configuration of the network services and, thus, it does not affect how and for what purpose the servers are used. Supplier is the only party that can make decisions about the use of the servers during the period of use. Supplier has the right to decide how data are transported using the servers, whether to reconfigure the servers, and whether to use the servers for another purpose. Accordingly, Supplier controls the use of the servers in providing network services to Customer. There is no need to assess whether the servers are identified assets because Customer does not have the right to control the use of the servers.
","snippet":"Customer does not control the use of the servers because Customer's only decision-making rights relate to deciding on the level of network services (the output of the servers) before the period of use—the level of networ…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53ef4130a8b9e2116cc857caf50a485dd934aa12e760dbc98ff62a06b13f605d","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-127","para":"55-127","html":"
Customer enters into a contract with an information technology company (Supplier) for the use of an identified server for three years. Supplier delivers and installs the server at Customer's premises in accordance with Customer's instructions and provides repair and maintenance services for the server, as needed, throughout the period of use. Supplier substitutes the server only in the case of malfunction. Customer decides which data to store on the server and how to integrate the server within its operations. Customer can change its decisions in this regard throughout the period of use.
","snippet":"Customer enters into a contract with an information technology company (Supplier) for the use of an identified server for three years. Supplier delivers and installs the server at Customer's premises in accordance with C…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c9713bc9ee664cae2ff362e3b4a784abb8f4e3d71f00d08b7e29e8111f5ec230","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-128","para":"55-128","html":"
The contract contains a lease. Customer has the right to use the server for three years.
","snippet":"The contract contains a lease. Customer has the right to use the server for three years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d0de0c045aa9385d743877d7f976b4d8bb3d6f245566e3938c966a9c9bc6c4f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-129","para":"55-129","html":"
There is an identified asset. The server is explicitly specified in the contract. Supplier can substitute the server only if it is malfunctioning.
","snippet":"There is an identified asset. The server is explicitly specified in the contract. Supplier can substitute the server only if it is malfunctioning.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:38ca64613fb7ada4887fd58fe6d533608a2003c0383ac9f7aaf115c478360b61","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-130","para":"55-130","html":"
Customer has the right to control the use of the server throughout the three-year period of use because:
  1. a
    Customer has the right to obtain substantially all of the economic benefits from use of the server over the three-year period of use. Customer has exclusive use of the server throughout the period of use.
  2. b
    Customer has the right to direct the use of the server. Customer makes the relevant decisions about how and for what purpose the server is used because it has the right to decide which aspect of its operations the server is used to support and which data it stores on the server. Customer is the only party that can make decisions about the use of the server during the period of use.
","snippet":"Customer has the right to control the use of the server throughout the three-year period of use because:\n(a) Customer has the right to obtain substantially all of the economic benefits from use of the server over the thr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3791422790c3ed9ed3426b9f7bc40d46cce8c84c0a3f52f28e46260e257a7cd0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-131","para":"55-131","html":"
Examples 11 through 14 illustrate separating components of a contract.
","snippet":"Examples 11 through 14 illustrate separating components of a contract.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0eb3aa4fa1988817668c1b1038bc7a4d9f98e275f623e9dc4f5613f9eedd7efd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-132","para":"55-132","html":"
Lessor leases a bulldozer, a truck, and a crane to Lessee to be used in Lessee's construction operations for three years. Lessor also agrees to maintain each piece of equipment throughout the lease term. The total consideration in the contract is $600,000, payable in $200,000 annual installments.
","snippet":"Lessor leases a bulldozer, a truck, and a crane to Lessee to be used in Lessee's construction operations for three years. Lessor also agrees to maintain each piece of equipment throughout the lease term. The total consid…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df6b950f8e6e1384bf775507801dfdedd7e941df5519f65c70cd1e1005175a60","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-133","para":"55-133","html":"
Lessee and Lessor both conclude that the leases of the bulldozer, the truck, and the crane are each separate lease components because both of the criteria in paragraph 842-10-15-28 are met. That is:
  1. a
    The criterion in paragraph 842-10-15-28(a) is met because Lessee can benefit from each of the three pieces of equipment on its own or together with other readily available resources (for example, Lessee could readily lease or purchase an alternative truck or crane to use with the bulldozer).
  2. b
    The criterion in paragraph 842-10-15-28(b) is met because, despite the fact that Lessee is leasing all three machines for one purpose (that is, to engage in construction operations), the machines are not highly dependent on or highly interrelated with each other. The machines are not, in effect, inputs to a combined single item for which Lessee is contracting. Lessor can fulfill each of its obligations to lease one of the underlying assets independently of its fulfillment of the other lease obligations, and Lessee's ability to derive benefit from the lease of each piece of equipment is not significantly affected by its decision to lease or not lease the other equipment from Lessor.
","snippet":"Lessee and Lessor both conclude that the leases of the bulldozer, the truck, and the crane are each separate lease components because both of the criteria in paragraph 842-10-15-28 are met. That is:\n(a) The criterion in …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d574f7ede70099007f3d1aeda08f5fc5e728b1550bd4a54d2b8ffba3d6e8fb2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-134","para":"55-134","html":"
In accordance with paragraph 842-10-15-31, Lessee and Lessor will account for the nonlease maintenance services components separate from the three separate lease components (unless Lessee elects the practical expedient in paragraph 842-10-15-37 or Lessor elects the practical expedient in paragraph 842-10-15-42A when the conditions in that paragraph are met—see Case B [paragraphs
842-10-55-138 through 55-140
] for an example in which Lessee elects the practical expedient). In accordance with the identifying performance obligations guidance in paragraphs
606-10-25-19 through 25-22
, Lessor further concludes that its maintenance services for each piece of leased equipment are distinct and therefore separate performance obligations, resulting in the conclusion that there are three separate lease components and three separate nonlease components (that is, three maintenance service performance obligations).
","snippet":"In accordance with paragraph 842-10-15-31, Lessee and Lessor will account for the nonlease maintenance services components separate from the three separate lease components (unless Lessee elects the practical expedient i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ec1db5d509b5c8fa5edc8c3539242abe805d36826ed0a3d48a89a130d636348b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-135","para":"55-135","html":"
Lessor allocates the consideration in the contract to the separate lease components and nonlease components by applying the guidance in paragraphs
606-10-32-28 through 32-41
. The consideration allocated to each separate lease component constitutes the lease payments for purposes of Lessor's accounting for those components.
","snippet":"Lessor allocates the consideration in the contract to the separate lease components and nonlease components by applying the guidance in paragraphs 606-10-32-28 through 32-41. The consideration allocated to each separate …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:591c373ecee5c77c0ee0c8d2f819f943115f434e854eb1063e513261491a6a8f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-136","para":"55-136","html":"
Lessee allocates the consideration in the contract to the separate lease and nonlease components. Several suppliers provide maintenance services that relate to similar equipment such that there are observable standalone prices for the maintenance services for each piece of leased equipment. In addition, even though Lessor, who is the manufacturer of the equipment, requires that all leases of its equipment include maintenance services, Lessee is able to establish observable standalone prices for the three lease components on the basis of the price other lessors lease similar equipment on a standalone basis. The standalone prices for the separate lease and nonlease components are as follows.
","snippet":"Lessee allocates the consideration in the contract to the separate lease and nonlease components. Several suppliers provide maintenance services that relate to similar equipment such that there are observable standalone …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0241eb83f7fca4341cc83cc91148870a876e04559a5cc7f073973ac92c26bcb1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-137","para":"55-137","html":"
Lessee first allocates the consideration in the contract ($600,000) to the lease and nonlease components on a relative basis, utilizing the observable standalone prices determined in paragraph 842-10-55-136. Lessee then accounts for each separate lease component in accordance with Subtopic 842-20, treating the allocated consideration as the lease payments for each lease component. The nonlease components are accounted for by Lessee in accordance with other Topics. The allocation of the consideration to the lease and nonlease components is as follows.
","snippet":"Lessee first allocates the consideration in the contract ($600,000) to the lease and nonlease components on a relative basis, utilizing the observable standalone prices determined in paragraph 842-10-55-136. Lessee then …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:354e6642cd9de3b20b38fdf4bfaf59bce3ebaf63ff710606ba34f3c0cb10ff75","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-138","para":"55-138","html":"
Assume the same facts and circumstances as in Case A (paragraphs
842-10-55-132 through 55-137
), except that Lessee has made an accounting policy election to use the practical expedient to not separate nonlease from lease components for its leased construction equipment. Consequently, Lessee does not separate the maintenance services from the related lease components but, instead, accounts for the contract as containing only three lease components.
","snippet":"Assume the same facts and circumstances as in Case A (paragraphs 842-10-55-132 through 55-137), except that Lessee has made an accounting policy election to use the practical expedient to not separate nonlease from lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30d1c6fc725a39e192169e9097ebfb664fc8e3a2c21baa77073df84c8666c476","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-139","para":"55-139","html":"
Because Lessor regularly leases each piece of equipment bundled together with maintenance services on a standalone basis, there are observable standalone prices for each of the three combined components, each of which includes the lease and the maintenance services. Because each of the three separate lease components includes the lease of the equipment and the related maintenance services, the observable standalone price for each component in this scenario is greater than the observable standalone price for each separate lease component that does not include the maintenance services in Case A.
","snippet":"Because Lessor regularly leases each piece of equipment bundled together with maintenance services on a standalone basis, there are observable standalone prices for each of the three combined components, each of which in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9538f0ef0274359081fdf13749adca7bb06c346ce2a7eeb593f475740e345ad6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-140","para":"55-140","html":"
Lessee allocates the consideration in the contract ($600,000) to the three separate lease components on a relative basis utilizing the observable standalone selling price of each separate lease component (inclusive of maintenance services) and then accounts for each separate lease component in accordance with the guidance in Subtopic 842-20, treating the allocated consideration as the lease payments for each separate lease component. The standalone prices for each of the three combined lease components is as follows.
","snippet":"Lessee allocates the consideration in the contract ($600,000) to the three separate lease components on a relative basis utilizing the observable standalone selling price of each separate lease component (inclusive of ma…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f91e0b264948b88fd04e8b0aa945f59f1652c1116f408a69b43379fce01d0643","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-141","para":"55-141","html":"
Lessor and Lessee enter into a five-year lease of a building. The contract designates that Lessee is required to pay for the costs relating to the asset, including the real estate taxes and the insurance on the building. The real estate taxes would be owed by Lessor regardless of whether it leased the building and who the lessee is. Lessor is the named insured on the building insurance policy (that is, the insurance protects Lessor's investment in the building, and Lessor will receive the proceeds from any claim). The annual lease payments are fixed at $10,000 per year, while the annual real estate taxes and insurance premium will vary and be billed by Lessor to Lessee each year.
","snippet":"Lessor and Lessee enter into a five-year lease of a building. The contract designates that Lessee is required to pay for the costs relating to the asset, including the real estate taxes and the insurance on the building.…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:19bf9107791c9dd07c5cb72fb5ffb72c1019c1e390a3473786559d0874bbcff0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-142","para":"55-142","html":"
The real estate taxes and the building insurance are not components of the contract. The contract includes a single lease component— the right to use the building. Lessee's payments of those amounts solely represent a reimbursement of Lessor's costs and do not represent payments for goods or services in addition to the right to use the building. However, because the real estate taxes and insurance premiums during the lease term are variable, those payments are variable lease payments that do not depend on an index or a rate and are excluded from the measurement of the lease liability and recognized by Lessee in profit or loss in accordance with paragraph 842-20-25-5 or 842-20-25-6.Lessor also recognizes those payments as variable lease payments in accordance with paragraph 842-10-15-40A because the real estate taxes and insurance premiums are paid by Lessor to the taxing jurisdiction and insurance company and reimbursed by Lessee to Lessor. However, if Lessee paid the costs directly to the third parties, those lessor costs would not be recognized by Lessor as variable payments because of the requirement in paragraph 842-10-15-40A.
","snippet":"The real estate taxes and the building insurance are not components of the contract. The contract includes a single lease component— the right to use the building. Lessee's payments of those amounts solely represent a re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de05d4425dc99b5d817d8b55fb085a8b0dc12a2cd78ab4bfa0adef0824d473aa","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-143","para":"55-143","html":"
Assume the same facts and circumstances as in Case A (paragraphs
842-10-55-141 through 55-142
), except that the fixed annual lease payment is $13,000. There are no additional payments for real estate taxes or building insurance; however, the fixed payment is itemized in the contract (that is, $10,000 for rent, $2,000 for real estate taxes, and $1,000 for building insurance). Consistent with Case A, the taxes and insurance are not components of the contract. The contract includes a single lease component, the right to use the building. The $65,000 in payments Lessee will make over the 5-year lease term are all lease payments for the single component of the contract and, therefore, are included in the measurement of the lease liability.
","snippet":"Assume the same facts and circumstances as in Case A (paragraphs 842-10-55-141 through 55-142), except that the fixed annual lease payment is $13,000. There are no additional payments for real estate taxes or building in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ea423f348fcba8f5caa1c7034adc826d5f82a3e07b81f831aea7ce097ea5a30","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-144","para":"55-144","html":"
Assume the same facts and circumstances as in Case B (paragraph 842-10-55-143), except that the lease is of space within the building, rather than for the entire building, and the fixed annual lease payment of $13,000 also covers Lessor's performance of common area maintenance activities (for example, cleaning of common areas, parking lot maintenance, and providing utilities to the building). Consistent with Case B, the taxes and insurance are not components of the contract. However, the common area maintenance is a component because Lessor's activities transfer services to Lessee. That is, Lessee receives a service from Lessor in the form of the common area maintenance activities it would otherwise have to undertake itself or pay another party to provide (for example, cleaning the lobby for its customers, removing snow from the parking lot for its employees and customers, and providing utilities). The common area maintenance is a single component in this contract rather than multiple components, because Lessor performs the activities as needed (for example, plows snow or undertakes minor repairs when and as necessary) over the same period of time.
","snippet":"Assume the same facts and circumstances as in Case B (paragraph 842-10-55-143), except that the lease is of space within the building, rather than for the entire building, and the fixed annual lease payment of $13,000 al…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04e57d0d6471fbb10ad4365d9471eca53cbba7f17dc36e2cde69c92bc4cae9a9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-145","para":"55-145","html":"
Therefore, the contract in Case C includes two components—a lease component (that is, the right to use the building) and a nonlease component. The consideration in the contract of $65,000 is allocated between those 2 components (unless Lessee elects the practical expedient in paragraph 842-10-15-37 or Lessor elects the practical expedient in paragraph 842-10-15-42A when the conditions in that paragraph are met). The amount allocated to the lease component is the lease payments in accounting for the lease.
","snippet":"Therefore, the contract in Case C includes two components—a lease component (that is, the right to use the building) and a nonlease component. The consideration in the contract of $65,000 is allocated between those 2 com…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3d768a94c976a89c14519b79f50c28115984c5c4224804721ef0d2590a0f4e5","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-146","para":"55-146","html":"
Lessor leases a gas-fired turbine plant to Lessee for eight years so that Lessee can produce electricity for its customers. The plant consists of the turbine housed within a building together with the land on which the building sits. The building was designed specifically to house the turbine, has a similar economic life as the turbine of approximately 15 years, and has no alternative use. The lease does not transfer ownership of any of the underlying assets to Lessee or grant Lessee an option to purchase any of the underlying assets. Lessor does not obtain a residual value guarantee from Lessee or any other unrelated third party. The present value of the lease payments is not substantially all of the aggregate fair value of the three underlying assets.
","snippet":"Lessor leases a gas-fired turbine plant to Lessee for eight years so that Lessee can produce electricity for its customers. The plant consists of the turbine housed within a building together with the land on which the b…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:223978b85a027e62523cad7b0d701e365e774cbe70698f4e1f699842f21e0e39","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-147","para":"55-147","html":"
While the lease of the plant includes the lease of multiple underlying assets, the leases of those underlying assets do not meet the second criterion necessary to be separate lease components, which is that the right to use the underlying asset is neither dependent on nor highly interrelated with the other rights of use in the contract. Therefore, the contract contains only one lease component. The rights to use the turbine, the building, and the land are highly interrelated because each is an input to the customized combined item for which Lessee has contracted (that is, the right to use a gas-fired turbine plant that can produce electricity for distribution to Lessee's customers).
","snippet":"While the lease of the plant includes the lease of multiple underlying assets, the leases of those underlying assets do not meet the second criterion necessary to be separate lease components, which is that the right to …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8514013f981d3a1317ee154326a59b03999cbd89aefd238c998259de2b1881c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-148","para":"55-148","html":"
However, because the contract contains the lease of land, Lessee and Lessor also must consider the guidance in paragraph 842-10-15-29. Lessee and Lessor each conclude that the effect of accounting for the right to use the land as a separate lease component would be insignificant because Lessee's right to use the turbine, the building, and the land is coterminous and separating the right to use the land from the right to use the turbine and the building would not affect the lease classification of the turbine/building lease component. Lessee and Lessor each conclude that a single lease component comprising the turbine, the building, and the land would be classified as an operating lease, as would two separate lease components comprising the land and the turbine/building, respectively.
","snippet":"However, because the contract contains the lease of land, Lessee and Lessor also must consider the guidance in paragraph 842-10-15-29. Lessee and Lessor each conclude that the effect of accounting for the right to use th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:071aec48169e3e7803f2ddeea0f1754df7e2bafd83c2d151f89c392945bd2ab2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-149","para":"55-149","html":"
The predominant asset in the single lease component is the turbine. Lessee entered into the lease primarily to obtain the power-generation capabilities of the turbine. The building and land enable Lessee to obtain the benefits from use of the turbine. The land and building would have little, if any, use or value to Lessee in this contract without the turbine. Therefore, the remaining economic life of the turbine is considered in evaluating the classification of the single lease component.
","snippet":"The predominant asset in the single lease component is the turbine. Lessee entered into the lease primarily to obtain the power-generation capabilities of the turbine. The building and land enable Lessee to obtain the be…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d3a4bb5e1bc3112848aa6a0a329d773a2e7a506ea1090677efa09d42d24c4f4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-150","para":"55-150","html":"
Lessee and Lessor enter into a three-year lease of equipment that includes maintenance services on the equipment throughout the three-year lease term. Lessee will pay Lessor $100,000 per year plus an additional $7,000 each year that the equipment is operating a minimum number of hours at a specified level of productivity (that is, the equipment is not malfunctioning or inoperable). The potential $7,000 payment each year is variable because the payment depends on the equipment operating a minimum number of hours at a specified level of productivity. The lease is an operating lease.
","snippet":"Lessee and Lessor enter into a three-year lease of equipment that includes maintenance services on the equipment throughout the three-year lease term. Lessee will pay Lessor $100,000 per year plus an additional $7,000 ea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8c804c441d37ed5121f75af5a0bcc51f3f5bf10b2aaa6e78d334f8b36c018b58","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-151","para":"55-151","html":"
In accordance with paragraph 842-10-15-35, variable payments other than those that depend on an index or a rate are not accounted for as consideration in the contract by Lessee. Therefore, the consideration in the contract to be allocated by Lessee to the equipment lease and the maintenance services at lease commencement includes only the fixed payments of $100,000 each year (or $300,000 in total). Lessee allocates the consideration in the contract to the equipment lease and the maintenance services on the basis of the standalone prices of each, which, for purposes of this example, are $285,000 and $45,000, respectively.Each $100,000 annual fixed payment and each variable payment are allocated to the equipment lease and the maintenance services on the same basis as the initial allocation of the consideration in the contract (that is, 86.4 percent to the equipment lease and 13.6 percent to the maintenance services). Therefore, annual lease expense, excluding variable expense, is $86,364. Lessee recognizes the expense related to the variable payments in accordance with paragraphs 842-20-25-6 and
842-20-55-1 through 55-2
.
","snippet":"In accordance with paragraph 842-10-15-35, variable payments other than those that depend on an index or a rate are not accounted for as consideration in the contract by Lessee. Therefore, the consideration in the contra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b4e97219c0d3278d1188a00efaa8dd1677c0107a2cf44ce3d3efec9fb8afcf5c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-152","para":"55-152","html":"
In accordance with paragraphs
842-10-15-39 through 15-40
, Lessor also concludes that the potential variable payments should not be accounted for as consideration in the contract. That is because the potential variable payment each year is not solely related to performance of the nonlease maintenance services; the quality and condition of the underlying asset also substantively affect whether Lessor will earn those amounts. Therefore, Lessor's allocation of the consideration in the contract ($300,000) in this Example is the same as Lessee. Lessor will allocate, in accordance with paragraph 842-10-15-40, the variable payments between the lease and nonlease maintenance services (on the same basis as the initial allocation of the consideration in the contract), when and if the productivity targets are met. Lessor will recognize the portion allocated to the lease at that time and will recognize the portion allocated to the nonlease maintenance services in accordance with the guidance on satisfaction of performance obligations in Topic 606 on revenue from contracts with customers.
","snippet":"In accordance with paragraphs 842-10-15-39 through 15-40, Lessor also concludes that the potential variable payments should not be accounted for as consideration in the contract. That is because the potential variable pa…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79b919c911df87ad66bc199a88e26e49eaa5354c2f27b6c053f47162555763b2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-153","para":"55-153","html":"
Assume the same facts and circumstances as in Case A (paragraphs
842-10-55-150 through 55-152
), except in this scenario the maintenance services are highly specialized and no entity would expect the equipment to meet the performance metrics without the specialized maintenance services.
","snippet":"Assume the same facts and circumstances as in Case A (paragraphs 842-10-55-150 through 55-152), except in this scenario the maintenance services are highly specialized and no entity would expect the equipment to meet the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2fb5510ea32e0b29e996fd55dcbfb0dc66a8146f1826eee1cca9ef99cb88f0fb","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-154","para":"55-154","html":"
Lessee would account for the potential variable payments consistent with Case A. The rationale for this accounting also is consistent with that in Case A.
","snippet":"Lessee would account for the potential variable payments consistent with Case A. The rationale for this accounting also is consistent with that in Case A.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0b651b71f2afe814fd75d45b9af0fa3ac259da01f92c0e856106307aaec1dcb8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-155","para":"55-155","html":"
In contrast to Case A, Lessor concludes that the variable payments relate specifically to an outcome from Lessor's performance of its maintenance services. Therefore, Lessor evaluates the variable payments in accordance with the variable consideration guidance in paragraphs
606-10-32-5 through 32-13
. If Lessor estimates, using the most likely amount method, that it will be entitled to receive the $21,000 in variable payments and that it is probable that including that amount in the transaction price for the maintenance services would not result in a significant revenue reversal when the uncertainty of the performance bonus is resolved, the $21,000 would be included in the consideration in the contract. Because allocating the $21,000 entirely to the maintenance services would not result in an allocation that is consistent with the allocation objective in paragraph 606-10-32-28 (that is, it would result in allocating $61,909 to the maintenance services and the remainder to the equipment lease, which would not reasonably depict the consideration to which Lessor expects to be entitled for each component), the entire consideration in the contract of $321,000 is allocated on a relative standalone price basis as follows.
","snippet":"In contrast to Case A, Lessor concludes that the variable payments relate specifically to an outcome from Lessor's performance of its maintenance services. Therefore, Lessor evaluates the variable payments in accordance …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8456084858a77af2d02644283d8a3f71b50e120863c215c6f91dc80d1cde1303","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-156","para":"55-156","html":"
The $277,227 allocated to the equipment lease is the lease payment in accounting for the lease in accordance with Subtopic 842-30. Lessor will recognize the consideration in the contract allocated to the maintenance services in accordance with the guidance on the satisfaction of performance obligations in paragraphs
606-10-25-23 through 25-37
. If the consideration in the contract changes (for example, because Lessor no longer estimates that it will receive the full $21,000 in potential variable payments), Lessor will allocate the change in the transaction price on the same basis as was initially done.
","snippet":"The $277,227 allocated to the equipment lease is the lease payment in accounting for the lease in accordance with Subtopic 842-30. Lessor will recognize the consideration in the contract allocated to the maintenance serv…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6223ba9b174e68ad54be3907593635beb141d3753f0bac0805cd251141ef357","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-157","para":"55-157","html":"
Assume the same facts and circumstances as in Case B (paragraphs
842-10-55-153 through 55-156
), except that in this scenario all of the following apply:
  1. a
    The potential variable payments are $14,000 per year ($42,000 in total), and the annual fixed payments are $93,000 per year ($279,000 in total).
  2. b
    While Lessor's estimate of the variable payments to which it will be entitled is $42,000, Lessor concludes that it is not probable that including the full $42,000 in potential variable payments in the consideration in the contract will not result in a significant revenue reversal (that is, the entity applies the constraint on variable consideration in paragraph 606-10-32-11). Lessor concludes that only $28,000 is probable of not resulting in a significant revenue reversal. Therefore, the consideration in the contract is initially $307,000 ($279,000 + $28,000).
","snippet":"Assume the same facts and circumstances as in Case B (paragraphs 842-10-55-153 through 55-156), except that in this scenario all of the following apply:\n(a) The potential variable payments are $14,000 per year ($42,000 i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:938c44ee4fa2fc1e5f80010f0f8265d8d02b4ff8ad581e3222cca5c5d40e01a8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-158","para":"55-158","html":"
In contrast to Case B, Lessor concludes that allocating the variable payments entirely to the maintenance services and the fixed payments entirely to the equipment lease is consistent with the allocation objective in paragraph 606-10-32-28. This is because $42,000 (Lessor considers its estimate of the variable payments to which it expects to be entitled exclusive of the constraint on variable consideration in Topic 606 on revenue recognition) and $279,000 approximate the standalone price of the maintenance services ($45,000) and the equipment lease ($285,000), respectively. Because the variable payments are allocated entirely to the maintenance services, if the consideration in the contract changes (for example, because Lessor concludes it is now probable that it will earn the full $42,000 in variable payments), that change is allocated entirely to the maintenance services component in the contract.
","snippet":"In contrast to Case B, Lessor concludes that allocating the variable payments entirely to the maintenance services and the fixed payments entirely to the equipment lease is consistent with the allocation objective in par…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:18a76779b549e346162192024f76ae934e01a7d2e1697623a0f0a5e8e522f0f0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-159","para":"55-159","html":"
Examples 15 through 22 illustrate the accounting for lease modifications.
","snippet":"Examples 15 through 22 illustrate the accounting for lease modifications.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c08ded8e6ad58c77a1ee5042c1cc1df68859add9c3c476291909ad1bcdeba949","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-160","para":"55-160","html":"
Lessee enters into a 10-year lease for 10,000 square feet of office space. At the beginning of Year 6, Lessee and Lessor agree to modify the lease for the remaining 5 years to include an additional 10,000 square feet of office space in the same building. The increase in the lease payments is commensurate with the market rate at the date the modification is agreed for the additional 10,000 square feet of office space.
","snippet":"Lessee enters into a 10-year lease for 10,000 square feet of office space. At the beginning of Year 6, Lessee and Lessor agree to modify the lease for the remaining 5 years to include an additional 10,000 square feet of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10d4164d8d137cd7ac60f66903677742d03e7a47d57a5e2bdfec832edb38df12","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-161","para":"55-161","html":"
Lessee accounts for the modification as a new contract, separate from the original contract. This is because the modification grants Lessee an additional right of use as compared with the original contract, and the increase in the lease payments is commensurate with the standalone price of the additional right of use. Accordingly, from the effective date of the modification, Lessee would have 2 separate contracts, each of which contain a single lease component—the original, unmodified contract for 10,000 square feet of office space and the new contract for 10,000 additional square feet of office space, respectively. Lessee would not make any adjustments to the accounting for the original lease as a result of this modification.
","snippet":"Lessee accounts for the modification as a new contract, separate from the original contract. This is because the modification grants Lessee an additional right of use as compared with the original contract, and the incre…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06930d8cdee0de2e7e7986c74224205ee25574e3c1c3bf922001216c9b0f2ffa","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-162","para":"55-162","html":"
Lessee and Lessor enter into a 10-year lease for 10,000 square feet of office space in a building with a remaining economic life of 50 years. Annual payments are $100,000, paid in arrears. Lessee's incremental borrowing rate at the commencement date is 6 percent. The lease is classified as an operating lease. At the beginning of Year 6, Lessee and Lessor agree to modify the lease such that the total lease term increases from 10 years to 15 years. The annual lease payments increase to $110,000 per year for the remaining 10 years after the modification. Lessee's incremental borrowing rate is 7 percent at the date the modification is agreed to by the parties.
","snippet":"Lessee and Lessor enter into a 10-year lease for 10,000 square feet of office space in a building with a remaining economic life of 50 years. Annual payments are $100,000, paid in arrears. Lessee's incremental borrowing …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d41c5c18593cecbb60d1311329bcea15f64d98202b9f318a2946952eb23d5e7e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-163","para":"55-163","html":"
At the beginning of Year 6, Lessee's lease liability and its right-of-use asset both equal $421,236 (that is, because the lease payments are made annually in arrears and because the lease payments are even throughout the lease term, the lease liability and right-of-use asset will be equal).
","snippet":"At the beginning of Year 6, Lessee's lease liability and its right-of-use asset both equal $421,236 (that is, because the lease payments are made annually in arrears and because the lease payments are even throughout the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:48ac28e38a7312cfb9c349d99e9cfa8628c2fe98b1fcd356d67b9efa9da8cca1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-164","para":"55-164","html":"
The modification does not grant an additional right of use to the lessee; rather, it changes (modifies) an attribute of the right to use the 10,000 square feet of office space Lessee already controls. That is, after the modification, Lessee still controls only a single right of use transferred to Lessee at the original lease commencement date.
","snippet":"The modification does not grant an additional right of use to the lessee; rather, it changes (modifies) an attribute of the right to use the 10,000 square feet of office space Lessee already controls. That is, after the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0008b186c7ec27c787bcb0b11db4f78bfd872819896408aa88add22cbd7cb66b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-165","para":"55-165","html":"
Because the modification does not grant Lessee an additional right of use, the modification cannot be a separate contract. Therefore, at the effective date of the modification, Lessee reassesses classification of the lease (which does not change in this Example—see Case B [paragraphs
842-10-55-166 through 55-167
] for a change in lease classification) and remeasures the lease liability on the basis of the 10-year remaining lease term, 10 remaining payments of $110,000, and its incremental borrowing rate at the effective date of the modification of 7 percent. Consequently, the modified lease liability equals $772,594. The increase to the lease liability of $351,358 is recorded as an adjustment to the right-of-use asset (that is, there is no income or loss effect from the modification).
","snippet":"Because the modification does not grant Lessee an additional right of use, the modification cannot be a separate contract. Therefore, at the effective date of the modification, Lessee reassesses classification of the lea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5c7be8dc4bb7511b8681f8992b8e421ccae1d2d02886606258f7d03f258c8fd2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-166","para":"55-166","html":"
Assume the same facts as in Case A (paragraphs
842-10-55-162 through 55-165
), except that the underlying asset is a piece of equipment with a 12-year remaining economic life at the effective date of the modification. Consequently, when the lessee reassesses classification of the lease in accordance with paragraph 842-10-25-1 as of the effective date of the modification based on the modified rights and obligations of the parties, the lessee classifies the modified lease as a finance lease (that is, because the remaining lease term of 10 years is for a major part of the 12-year remaining economic life of the equipment).
","snippet":"Assume the same facts as in Case A (paragraphs 842-10-55-162 through 55-165), except that the underlying asset is a piece of equipment with a 12-year remaining economic life at the effective date of the modification. Con…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d43092abe68e7f01900d2e2e1c93b5759f7f2a8f9c3ec55ec995b7923159963","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-167","para":"55-167","html":"
Consistent with Case A, at the effective date of the modification, the lessee remeasures its lease liability based on the 10-year remaining lease term, 10 remaining payments of $110,000, and its incremental borrowing rate of 7 percent. Consequently, the modified lease liability equals $772,594. The increase to the lease liability of $351,358 is recorded as an adjustment to the right-of-use asset (that is, there is no income or loss effect from the modification). However, different from Case A, beginning on the effective date of the modification, Lessee accounts for the 10-year modified lease as a finance lease.
","snippet":"Consistent with Case A, at the effective date of the modification, the lessee remeasures its lease liability based on the 10-year remaining lease term, 10 remaining payments of $110,000, and its incremental borrowing rat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:348487e9031f6701a810c7a3f1f75b8e8bf580b00266943f2364f9b4f2e4fb4f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-168","para":"55-168","html":"
Lessee enters into a 10-year lease for 10,000 square feet of office space. The lease payments are $100,000 per year, paid in arrears. Lessee's incremental borrowing rate at lease commencement is 6 percent. At the beginning of Year 6, Lessee and Lessor agree to modify the contract to include an additional 10,000 square feet of office space on a different floor of the building for the final 4 years of the original 10-year lease term for a total annual fixed payment of $150,000 for the 20,000 square feet.
","snippet":"Lessee enters into a 10-year lease for 10,000 square feet of office space. The lease payments are $100,000 per year, paid in arrears. Lessee's incremental borrowing rate at lease commencement is 6 percent. At the beginni…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fc685bb11a8e0df793d0748cc500955c4bac7d6113c3a26f5922bfd850bb76ad","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-169","para":"55-169","html":"
The increase in the lease payments (of $50,000 per year) is at a substantial discount to the market rate at the date the modification is agreed to for leases substantially similar to that for the new 10,000 square feet of office space that cannot be attributed solely to the circumstances of the contract. Consequently, Lessee does not account for the modification as a separate contract.
","snippet":"The increase in the lease payments (of $50,000 per year) is at a substantial discount to the market rate at the date the modification is agreed to for leases substantially similar to that for the new 10,000 square feet o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:798f12138a165158695eeeac8e24ab782c97a592063b0dd576c4be7cb6ae55a1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-170","para":"55-170","html":"
Instead, Lessee accounts for the modified contract, which contains 2 separate lease components—first, the original 10,000 square feet of office space and, second, the right to use the additional 10,000 square feet of office space for 4 years that commences 1 year after the effective date of the modification. There are no nonlease components of the modified contract. The total lease payments, after the modification, are $700,000 (1 payment of $100,000 + 4 payments of $150,000).
","snippet":"Instead, Lessee accounts for the modified contract, which contains 2 separate lease components—first, the original 10,000 square feet of office space and, second, the right to use the additional 10,000 square feet of off…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95f82d03287eb2671f5c9ac763ffd41a286f1423c00520b1c59d1508d54ebc3f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-171","para":"55-171","html":"
Lessee allocates the lease payments in the modified contract to the 2 separate lease components on a relative standalone price basis, which, in this Example, results in the allocation of $388,889 to the original space lease and $311,111 to the additional space lease. The allocation is based on the remaining lease terms of each separate lease component (that is, 5 years for the original 10,000-square-foot lease and 4 years for the additional 10,000-square-foot lease). The remaining lease cost for each separate lease component is equal to the total payments, as allocated, which will be recognized on a straight-line basis over their respective lease terms. Lessee remeasures the lease liability for the original space lease as of the effective date of the modification—the lease classification of which does not change as a result of the modification—on the basis of all of the following:
  1. a
    A remaining lease term of 5 years
  2. b
    Annual allocated lease payments of $77,778 in Years 6 through 10 (see paragraph 842-10-55-173)
  3. c
    Lessee's incremental borrowing rate at the effective date of the modification of 7 percent.
","snippet":"Lessee allocates the lease payments in the modified contract to the 2 separate lease components on a relative standalone price basis, which, in this Example, results in the allocation of $388,889 to the original space le…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6fcaf9311e31ae3d16decf1ce451b48542b0513e1f13018de3e5d397b687125","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-172","para":"55-172","html":"
The remeasured lease liability for the original space lease equals $318,904. Lessee recognizes the difference between the carrying amount of the modified lease liability and the carrying amount of the lease liability immediately before the modification of $102,332 ($421,236 - $318,904) as an adjustment to the right-of-use asset.
","snippet":"The remeasured lease liability for the original space lease equals $318,904. Lessee recognizes the difference between the carrying amount of the modified lease liability and the carrying amount of the lease liability imm…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cff328b38c84ef13774cc41a5f2e2cee64b66383a2370a6a3e2ae6fd8d5c1ef8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-173","para":"55-173","html":"
During Year 6, Lessee recognizes lease cost of $77,778. At the end of Year 6, Lessee makes its lease payment of $100,000, of which $77,778 is allocated to the lease of the original office space and $22,222 is allocated to the lease of the additional office space as a prepayment of rent. Lessee allocates the lease payment in this manner to reflect even payments for the even use of the separate lease components over their respective lease terms.
","snippet":"During Year 6, Lessee recognizes lease cost of $77,778. At the end of Year 6, Lessee makes its lease payment of $100,000, of which $77,778 is allocated to the lease of the original office space and $22,222 is allocated t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fa1a35b50d9caae1791b982a6519829691d5f34811fedda83bde4a0be10cc766","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-174","para":"55-174","html":"
At the commencement date of the separate lease component for the additional office space, which is 1 year after the effective date of the modification, Lessee measures and recognizes the lease liability at $241,896 on the basis of all of the following:
  1. a
    A lease term of 4 years
  2. b
    Four allocated annual payments of $72,222 ([allocated lease payments of $311,111 − $22,222 rent prepayment] ÷ 4 years)
  3. c
    Lessee's incremental borrowing rate at the commencement date of the separate lease component for the additional office space of 7.5 percent.
","snippet":"At the commencement date of the separate lease component for the additional office space, which is 1 year after the effective date of the modification, Lessee measures and recognizes the lease liability at $241,896 on th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c415b9d2708ae3809e1231b455a84b4d038d8c2fbdd7d68f46bfdf4aa37ab1b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-175","para":"55-175","html":"
At the commencement date, the right-of-use asset for the additional office space lease component is recognized and measured at $264,118 (the sum of the lease liability of $241,896 and the prepaid rent asset of $22,222).
","snippet":"At the commencement date, the right-of-use asset for the additional office space lease component is recognized and measured at $264,118 (the sum of the lease liability of $241,896 and the prepaid rent asset of $22,222).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:de6751a7e8a981ad1c2270cdd9fdce116f1a161e5ac6bfc009d695ac34321f2e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-176","para":"55-176","html":"
During Years 7-10, Lessee recognizes lease cost of $77,778 each year for each separate lease component and allocates each $150,000 annual lease payment of $77,778 to the original office space lease and $72,222 to the additional office space lease.
","snippet":"During Years 7-10, Lessee recognizes lease cost of $77,778 each year for each separate lease component and allocates each $150,000 annual lease payment of $77,778 to the original office space lease and $72,222 to the add…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ac43b7f1e7d37fabeaded12fa2e68d370e57ef6748eb0295306977adb6abd0e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-177","para":"55-177","html":"
Lessee enters into a 10-year lease for 10,000 square feet of office space. The annual lease payment is initially $100,000, paid in arrears, and increases 5 percent each year during the lease term. Lessee's incremental borrowing rate at lease commencement is 6 percent. Lessee does not provide a residual value guarantee. The lease does not transfer ownership of the office space to Lessee or grant Lessee an option to purchase the space. The lease is an operating lease for all of the following reasons:
  1. a
    The lease term is 10 years, while the office building has a remaining economic life of 40 years.
  2. b
    The fair value of the office space is estimated to be significantly in excess of the present value of the lease payments.
  3. c
    The office space is expected to have an alternative use to Lessor at the end of the lease term.
","snippet":"Lessee enters into a 10-year lease for 10,000 square feet of office space. The annual lease payment is initially $100,000, paid in arrears, and increases 5 percent each year during the lease term. Lessee's incremental bo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:939c6e23abc4bbf6d1a5ca2235f170076cfa7dcb895682dec83ecc4450e52f86","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-178","para":"55-178","html":"
At the beginning of Year 6, Lessee and Lessor agree to modify the original lease for the remaining 5 years to reduce the lease to only 5,000 square feet of the original space and to reduce the annual lease payment to $68,000. That amount will increase 5 percent each year thereafter of the remaining lease term.
","snippet":"At the beginning of Year 6, Lessee and Lessor agree to modify the original lease for the remaining 5 years to reduce the lease to only 5,000 square feet of the original space and to reduce the annual lease payment to $68…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0542643f25fb361b9dd7e8d6068e850815d56940321fc353538f3d9e98992e10","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-179","para":"55-179","html":"
The classification of the lease does not change as a result of the modification. It is clear based on the terms of the modified lease that it is not a finance lease because the modification reduces both the lease term and the lease payments. Lessee remeasures the lease liability for the modified lease at the effective date of the modification on the basis of all of the following:
  1. a
    A remaining lease term of 5 years
  2. b
    Lease payments of $68,000 in the year of modification (Year 6), increasing by 5 percent each year thereafter
  3. c
    Lessee's incremental borrowing rate at the effective date of the modification of 7 percent.
","snippet":"The classification of the lease does not change as a result of the modification. It is clear based on the terms of the modified lease that it is not a finance lease because the modification reduces both the lease term an…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:da1e6bce23095916638c651d1afab1e6b7f30cca37d3c0ae6980f68511d5feee","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-180","para":"55-180","html":"
The remeasured lease liability equals $306,098.
","snippet":"The remeasured lease liability equals $306,098.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:98e0adce468b0b7a20353070f3786153d6b1d7098d549f3354b7e1abbc5a5d87","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-181","para":"55-181","html":"
The difference between the premodification liability and the modified lease liability is $284,669 ($590,767 - $306,098). That difference is 48.2 percent ($284,669 ÷ $590,767) of the premodification lease liability. The decrease in the lease liability reflects the early termination of the right to use 5,000 square feet of space (50 percent of the original leased space), the change in the lease payments, and the change in the discount rate.
","snippet":"The difference between the premodification liability and the modified lease liability is $284,669 ($590,767 - $306,098). That difference is 48.2 percent ($284,669 ÷ $590,767) of the premodification lease liability. The d…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f67405970863deb7af79540b43509bb4682178c8c452b4711dd03d10973fff6b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-182","para":"55-182","html":"
Lessee decreases the carrying amount of the right-of-use asset to reflect the partial termination of the lease based on the adjustment to the carrying amount of the lease liability, with any difference recognized in profit or loss. The premodification right-of-use asset is $514,436. Therefore, at the effective date of the modification, Lessee reduces the carrying amount of the right-of-use asset by $247,888 (48.2% × $514,436). Lessee recognizes the difference between the adjustment to the lease liability and the adjustment to the right-of-use asset ($284,669 - $247,888 = $36,781) as a gain.
","snippet":"Lessee decreases the carrying amount of the right-of-use asset to reflect the partial termination of the lease based on the adjustment to the carrying amount of the lease liability, with any difference recognized in prof…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22f9dc9e7fc140b29c19b9914c5386fd8746a6665c27abd03713890b7f6af2a0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-183","para":"55-183","html":"
Lessee determines the proportionate decrease in the carrying amount of the right-of-use asset based on the remaining right-of-use asset (that is, 5,000 square feet corresponding to 50 percent of the original right-of-use asset).
","snippet":"Lessee determines the proportionate decrease in the carrying amount of the right-of-use asset based on the remaining right-of-use asset (that is, 5,000 square feet corresponding to 50 percent of the original right-of-use…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:320e1d01713c026915efbcc141e1d7917739c2e2c60304715b5197e3c045713a","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-184","para":"55-184","html":"
Fifty percent of the premodification right-of-use asset is $257,218 (50% x $514,436). Fifty percent of the premodification lease liability is $295,384 (50% x $590,767). Consequently, Lessee decreases the carrying amount of the right-of-use asset by $257,218 and the carrying amount of the lease liability by $295,384. At the effective date of the modification, Lessee recognizes the difference between the decrease in the lease liability and the decrease in the right-of-use asset of $38,166 ($295,384 − $257,218) as a gain.
","snippet":"Fifty percent of the premodification right-of-use asset is $257,218 (50% x $514,436). Fifty percent of the premodification lease liability is $295,384 (50% x $590,767). Consequently, Lessee decreases the carrying amount …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ccbf61be572ab10473fc12bb3539d7946a3a65d8f17ba84374155639aea6df0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-185","para":"55-185","html":"
Lessee recognizes the difference between the remaining lease liability of $295,384 and the modified lease liability of $306,098 (which equals $10,714) as an adjustment to the right-of-use asset reflecting the change in the consideration paid for the lease and the revised discount rate.
","snippet":"Lessee recognizes the difference between the remaining lease liability of $295,384 and the modified lease liability of $306,098 (which equals $10,714) as an adjustment to the right-of-use asset reflecting the change in t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:21dcd4faf8a445f1a059a30e05d82a2db4cbac20007c8a264e9e13600bd97797","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-186","para":"55-186","html":"
Lessee enters into a 10-year lease for 10,000 square feet of office space. The lease payments are $95,000 in Year 1, paid in arrears, and increase by $1,000 every year thereafter. The original discount rate for the lease is 6 percent. The lease is an operating lease. At the beginning of Year 6, Lessee and Lessor agree to modify the original lease for the remaining 5 years to reduce the lease payments by $7,000 each year (that is, the lease payments will be $93,000 in Year 6 and will continue to increase by $1,000 every year thereafter). The modification only changes the lease payments and, therefore, cannot be accounted for as a separate contract. The classification of the lease does not change as a result of the modification.
","snippet":"Lessee enters into a 10-year lease for 10,000 square feet of office space. The lease payments are $95,000 in Year 1, paid in arrears, and increase by $1,000 every year thereafter. The original discount rate for the lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fbffb564fbb550ddb712bf3486f09f862fa8f44aad2d59aeced0ed1baed7bc17","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-187","para":"55-187","html":"
Lessee remeasures the lease liability for the modified lease on the basis of all of the following:
  1. a
    Remaining lease term of 5 years
  2. b
    Payments of $93,000 in Year 6, increasing by $1,000 each year for the remainder of the lease term
  3. c
    Lessee's incremental borrowing rate at the effective date of the modification of 7 percent.
","snippet":"Lessee remeasures the lease liability for the modified lease on the basis of all of the following:\n(a) Remaining lease term of 5 years\n(b) Payments of $93,000 in Year 6, increasing by $1,000 each year for the remainder o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79a8088a928b649fc573ff47e818ffc791977b1b79c2560f4db9e7b7ae3f3ef3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-188","para":"55-188","html":"
The remeasured lease liability equals $388,965. Lessee recognizes the difference between the carrying amount of the modified lease liability and the lease liability immediately before the effective date of the modification of $40,206 ($429,171 premodification lease liability - $388,965 modified lease liability) as a corresponding reduction to the right-of-use asset. Therefore, the adjusted right-of-use asset equals $376,465 as of the effective date of the modification. Lessee calculates its remaining lease cost as $462,500 (the sum of the total lease payments, as adjusted for the effects of the lease modification, of $960,000 reduced by the total lease cost recognized in prior periods of $497,500), which it will recognize on a straight-line basis over the remaining lease term.
","snippet":"The remeasured lease liability equals $388,965. Lessee recognizes the difference between the carrying amount of the modified lease liability and the lease liability immediately before the effective date of the modificati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3070bfd220f1b1ab55e9689bb104e76454dbef76be7b4d2345460fd7ecde4db","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-189","para":"55-189","html":"
During Year 6, Lessee recognizes lease cost of $92,500 ($462,500 remaining lease cost ÷ 5 years). As of the end of Year 6, Lessee's lease liability equals $323,193 (present value of the remaining lease payments, discounted at 7 percent), and its right-of-use asset equals $311,193 (the balance of the lease liability - the remaining accrued rent balance of $12,000). Lessee recognizes additional lease cost of $92,500 each year of the remaining lease term and measures its lease liability and right-of-use asset in the same manner as at the end of Year 6 each remaining year of the lease term. The following are the balances of the lease liability and the right-of-use asset at the end of Years 7 through 10 of the lease.
","snippet":"During Year 6, Lessee recognizes lease cost of $92,500 ($462,500 remaining lease cost ÷ 5 years). As of the end of Year 6, Lessee's lease liability equals $323,193 (present value of the remaining lease payments, discount…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eca9ae97ed7644b44b5c9ad064c2a64d6ee6c587bdeae942663ec81108c5e8a9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-190","para":"55-190","html":"
Lessor enters into a 10-year lease with Lessee for 10,000 square feet of office space. The annual lease payments are $100,000 in the first year, increasing by 5 percent each year thereafter, payable in arrears. The lease term is not for a major part of the remaining economic life of the office space (40 years), and the present value of the lease payments is not substantially all of the fair value of the office space. Furthermore, the title does not transfer to Lessee as a consequence of the lease, the lease does not contain an option for Lessee to purchase the office space, and the asset is not specialized such that it clearly has an alternative use to Lessor at the end of the lease term. Consequently, the lease is classified as an operating lease.
","snippet":"Lessor enters into a 10-year lease with Lessee for 10,000 square feet of office space. The annual lease payments are $100,000 in the first year, increasing by 5 percent each year thereafter, payable in arrears. The lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c2c067088c22e36e8df975233bb7ac5217161ab6ed6d302ed259754fb1b834b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-191","para":"55-191","html":"
At the beginning of Year 6, Lessee and Lessor agree to amend the original lease for the remaining 5 years to include an additional 10,000 square feet of office space in the same building for a total annual fixed payment of $150,000. The increase in total consideration is at a discount both to the current market rate for the new 10,000 square feet of office space and in the context of that particular contract. The modified lease continues to be classified as an operating lease.
","snippet":"At the beginning of Year 6, Lessee and Lessor agree to amend the original lease for the remaining 5 years to include an additional 10,000 square feet of office space in the same building for a total annual fixed payment …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76e34a87ce6354a7f4472d32db1115dd117c2fbcc4ad88dd0328181ab1e10713","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-192","para":"55-192","html":"
At the effective date of the modification (at the beginning of Year 6), Lessor has an accrued lease rental asset of $76,331 (rental income recognized on a straight-line basis for the first 5 years of the lease of $628,895 [$1,257,789 ÷ 10 years = $125,779 per year] less lease payments for the first 5 years of $552,564 [that is, $100,000 in Year 1, $105,000 in Year 2, $110,250 in Year 3, $115,763 in Year 4, and $121,551 in Year 5]).
","snippet":"At the effective date of the modification (at the beginning of Year 6), Lessor has an accrued lease rental asset of $76,331 (rental income recognized on a straight-line basis for the first 5 years of the lease of $628,89…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:40622e7504e0d2e8e44411c2eb02a39208132f051f0679c35dcfaa206240f486","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-193","para":"55-193","html":"
Because the change in pricing of the lease is not commensurate with the standalone price for the additional right-of-use asset, Lessor does not account for the modification as a new lease, separate from the original 10-year lease. Instead, Lessor accounts for the modified lease prospectively from the effective date of the modification, recognizing the lease payments to be made under the modified lease of $750,000 ($150,000 × 5 years), net of Lessor's accrued rent asset of $76,331, on a straight-line basis over the remaining 5-year lease term ($673,669 ÷ 5 years = $134,734 per year). At the end of the lease, Lessor will have recognized as lease income the $1,302,564 in lease payments it receives from Lessee during the 10-year lease term.
","snippet":"Because the change in pricing of the lease is not commensurate with the standalone price for the additional right-of-use asset, Lessor does not account for the modification as a new lease, separate from the original 10-y…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ce1a25c753c9d005ee2b7824b5f288f5122c2dd881471362fd12a0b0eb20e182","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-194","para":"55-194","html":"
Lessor enters into a four-year lease of a piece of nonspecialized equipment. The annual lease payments are $81,000 in the first year, increasing by 5 percent each year thereafter, payable in arrears. The estimated residual value of the equipment is $90,000, of which none is guaranteed. The remaining economic life of the equipment at lease commencement is seven years. The carrying amount of the equipment and its fair value are both $425,000 at the commencement date. The lease is not for a major part of the remaining economic life of the equipment, and the present value of the lease payments is not substantially all of the fair value of the equipment. Furthermore, title does not transfer to Lessee as a result of the lease, the lease does not contain an option for Lessee to purchase the underlying asset, and because the asset is nonspecialized, it is expected to have an alternative use to Lessor at the end of the lease term. Consequently, the lease is classified as an operating lease.
","snippet":"Lessor enters into a four-year lease of a piece of nonspecialized equipment. The annual lease payments are $81,000 in the first year, increasing by 5 percent each year thereafter, payable in arrears. The estimated residu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f5bf710d0e4060ca500ae3d9db54b6c71e4c88870e4fd8129c3a135ef86eb2b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-195","para":"55-195","html":"
At the beginning of Year 3, Lessee and Lessor agree to extend the lease term by two years. That is, the modified lease is now a six-year lease, as compared with the original four-year lease. The additional two years were not an option when the original lease was negotiated. The modification alters the Lessee's right to use the equipment; it does not grant Lessee an additional right of use. Therefore, Lessor does not account for the modification as a separate contract from the original four-year lease contract.
","snippet":"At the beginning of Year 3, Lessee and Lessor agree to extend the lease term by two years. That is, the modified lease is now a six-year lease, as compared with the original four-year lease. The additional two years were…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a7c354963b4d1dd8cdf98482e7470abf8027a184f2c534445158c6b7feb2f0a6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-196","para":"55-196","html":"
On the effective date of the modification, the fair value of the equipment is $346,250, and the remaining economic life of the equipment is 5 years. The estimated residual value of the equipment is $35,000, of which none is guaranteed. The modified lease is for a major part of the remaining economic life of the equipment at the effective date of the modification (four years out of the five-year-remaining economic life of the equipment). Consequently, the modified lease is classified as a sales-type lease.
","snippet":"On the effective date of the modification, the fair value of the equipment is $346,250, and the remaining economic life of the equipment is 5 years. The estimated residual value of the equipment is $35,000, of which none…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:44cf1a7dff3f8397f0065440ca0d8fbb624b19306e7045612f34f04c74047778","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-197","para":"55-197","html":"
In accounting for the modification, Lessor determines the discount rate for the modified lease (that is, the rate implicit in the modified lease) to be 7.6 percent. Lessor recognizes the net investment in the modified lease of $346,250 and derecognizes both the accrued rent and the equipment at the effective date of the modification. Lessor also recognizes, in accordance with paragraph 842-10-25-15(b), selling profit of $34,169 ($320,139 lease receivable - $8,510 accrued rent balance - the $277,460 carrying amount of the equipment derecognized, net of the unguaranteed residual asset [$277,460 = $303,571 - $26,111]). After the effective date of the modification, Lessor accounts for the modified lease in the same manner as any other sales-type lease in accordance with Subtopic 842-30.
","snippet":"In accounting for the modification, Lessor determines the discount rate for the modified lease (that is, the rate implicit in the modified lease) to be 7.6 percent. Lessor recognizes the net investment in the modified le…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d366a1d23703bfa1537a4f2741a5cc48d17ae1187993e929f97255fe520069aa","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-198","para":"55-198","html":"
At the beginning of Year 3, Lessee and Lessor enter into a modification to extend the lease term by 1 year, and Lessee agrees to make lease payments of $108,000 per year for each of the remaining 3 years of the modified lease. No other terms of the contract are modified. Concurrent with the execution of the modification, Lessor obtains a residual value guarantee from an unrelated third party for $40,000. Consistent with Case A (paragraphs
842-10-55-194 through 55-197
), at the effective date of the modification the fair value of the equipment is $346,250, the carrying amount of the equipment is $303,571, and Lessor's accrued rent balance is $8,510. The estimated residual value at the end of the modified lease term is $80,000. The discount rate for the modified lease is 7.356 percent.
","snippet":"At the beginning of Year 3, Lessee and Lessor enter into a modification to extend the lease term by 1 year, and Lessee agrees to make lease payments of $108,000 per year for each of the remaining 3 years of the modified …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff696d4a62a693ae3cdb1996fdf915169d69e35e7f92ba7cbc5b521c3c26a9b0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-199","para":"55-199","html":"
Lessor reassesses the lease classification as of the effective date of the modification and concludes that the modified lease is a direct financing lease because none of the criteria in paragraph 842-10-25-2 and both criteria in paragraph 842-10-25-3(b) are met.
","snippet":"Lessor reassesses the lease classification as of the effective date of the modification and concludes that the modified lease is a direct financing lease because none of the criteria in paragraph 842-10-25-2 and both cri…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a415fc1c465ff57c4574e8e6680cef93af4e684de147cfe52c4595cdcb0e98cf","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-200","para":"55-200","html":"
Therefore, at the effective date of the modification, Lessor recognizes a net investment in the modified lease of $312,081, which is the fair value of the equipment ($346,250) less the selling profit on the lease ($34,169 = $313,922 lease receivable - $8,510 accrued rent balance - the $271,243 carrying amount of the equipment derecognized, net of the unguaranteed residual asset [$271,243 = $303,571 - $32,328]), which is deferred as part of the net investment in the lease. After the effective date of the modification, Lessor accounts for the modified lease in the same manner as any other direct financing lease in accordance with Subtopic 842-30.
","snippet":"Therefore, at the effective date of the modification, Lessor recognizes a net investment in the modified lease of $312,081, which is the fair value of the equipment ($346,250) less the selling profit on the lease ($34,16…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9aa06bd3dae00092040d935c3bf035176177ed58527c89daf47a3561b8cb8a5c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-201","para":"55-201","html":"
Lessor enters into a six-year lease of a piece of new, nonspecialized equipment with a nine-year economic life. The annual lease payments are $11,000, payable in arrears. The estimated residual value of the equipment is $21,000, of which $15,000 is guaranteed by a third-party unrelated to Lessee or Lessor. The lease does not contain an option for Lessee to purchase the equipment, and the title does not transfer to Lessee as a consequence of the lease. The fair value of the equipment at lease commencement is $65,240, which is equal to its cost (and carrying amount). Lessor incurs no initial direct costs in connection with the lease. The rate implicit in the lease is 7.5 percent such that the present value of the lease payments is $51,632 and does not amount to substantially all of the fair value of the equipment.
","snippet":"Lessor enters into a six-year lease of a piece of new, nonspecialized equipment with a nine-year economic life. The annual lease payments are $11,000, payable in arrears. The estimated residual value of the equipment is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:900d7faea53738b44e7c1184f246a1d4d5d650376212d220ce254dd21a7e70ce","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-202","para":"55-202","html":"
The Lessor concludes that the lease is not a sales-type lease because none of the criteria in paragraph 842-10-25-2 are met. However, the sum of the present value of the lease payments and the present value of the residual value of the underlying asset guaranteed by the third-party guarantor is $61,352, which is substantially all of the fair value of the equipment, and collectibility of the lease payments is probable. Consequently, the lease is classified as a direct financing lease. Lessor recognizes the net investment in the lease of $65,240 (which includes the lease receivable of $61,352 and the present value of the unguaranteed residual value of $3,888 [the present value of the difference between the expected residual value of $21,000 and the guaranteed residual value of $15,000]) and derecognizes the equipment with a carrying amount of $65,240.
","snippet":"The Lessor concludes that the lease is not a sales-type lease because none of the criteria in paragraph 842-10-25-2 are met. However, the sum of the present value of the lease payments and the present value of the residu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b965729c5e887d948c35a4c572d20fe5081fa814623758e391d0cfc69fdabf3b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-203","para":"55-203","html":"
At the end of Year 1, Lessor receives a lease payment of $11,000 from Lessee and recognizes interest income of $4,893 ($65,240 × 7.5%). Therefore, the carrying amount of the net investment in the lease is $59,133 ($65,240 + $4,893 - $11,000).
","snippet":"At the end of Year 1, Lessor receives a lease payment of $11,000 from Lessee and recognizes interest income of $4,893 ($65,240 × 7.5%). Therefore, the carrying amount of the net investment in the lease is $59,133 ($65,24…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16166307933035ad2104d18f0c6f27f848c2b901d0830ac44638204ee97b9de3","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-204","para":"55-204","html":"
At the end of Year 1, the lease term is reduced by 1 year and the annual lease payment is reduced to $10,000 for the remaining 4 years of the modified lease term. The estimated residual value of the equipment at the end of the modified lease term is $33,000, of which $30,000 is guaranteed by the unrelated third party, while the fair value of the equipment is $56,000. The remaining economic life of the equipment is 8 years, and the present value of the remaining lease payments, discounted using the rate implicit in the modified lease of 8.857 percent, is $32,499. Lessor concludes that the modified lease is not a sales-type lease because none of the criteria in paragraph 842-10-25-2 are met. However, the sum of the present value of the lease payments and the present value of the residual value of the underlying asset guaranteed by the third-party guarantor, discounted using the rate implicit in the modified lease of 8.857 percent, is $53,864, which is substantially all of the fair value of the equipment, and collectibility of the lease payments is probable. As such, the modified lease is classified as a direct financing lease.
","snippet":"At the end of Year 1, the lease term is reduced by 1 year and the annual lease payment is reduced to $10,000 for the remaining 4 years of the modified lease term. The estimated residual value of the equipment at the end …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:63257ebe32e186485e6d159eb8795ecbe85e04b0308c8479f39bc83626d14225","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-205","para":"55-205","html":"
In accounting for the modification in accordance with paragraph 842-10-25-16(a), Lessor carries forward the balance of the net investment in the lease of $59,133 immediately before the effective date of the modification as the opening balance of the net investment in the modified lease. To retain the same net investment in the lease even while the lease payments, the lease term, and the estimated residual value have all changed, Lessor adjusts the discount rate for the lease from the rate implicit in the modified lease of 8.857 percent to 6.95 percent. This discount rate is used to calculate interest income on the net investment in the lease throughout the remaining term of the modified lease and will result, at the end of the modified lease term, in a net investment balance that equals the estimated residual value of the underlying asset of $33,000.
","snippet":"In accounting for the modification in accordance with paragraph 842-10-25-16(a), Lessor carries forward the balance of the net investment in the lease of $59,133 immediately before the effective date of the modification …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:316c7dd6398a1d70e7fc3cd3e5eeadf1bd53d0d7f28f5efae5bb15647182840e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-206","para":"55-206","html":"
At the end of Year 1, the lease term is extended for two years. The lease payments remain $11,000 annually, paid in arrears, for the remainder of the lease term. The estimated residual value is $6,500, of which none is guaranteed. The rate implicit in the modified lease is 7.58 percent. At the effective date of the modification, the remaining economic life of the equipment is 8 years, and the fair value of the equipment is $62,000. Because the modified lease term is now for the major part of the remaining economic life of the equipment, the modified lease is classified as a sales-type lease.
","snippet":"At the end of Year 1, the lease term is extended for two years. The lease payments remain $11,000 annually, paid in arrears, for the remainder of the lease term. The estimated residual value is $6,500, of which none is g…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0e7886f4d70e541a669a2d3646ba4a042a8cc6e5228a504a5a72207527e8dc1f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-207","para":"55-207","html":"
On the effective date of the modification, Lessor recognizes a net investment in the sales-type lease of $62,000, which is equal to the fair value of the equipment at the effective date of the modification, and derecognizes the carrying amount of the net investment in the original direct financing lease of $59,133. The difference of $2,867 is the selling profit on the modified lease. After the effective date of the modification, Lessor accounts for the sales-type lease in the same manner as any other sales-type lease in accordance with Subtopic 842-30.
","snippet":"On the effective date of the modification, Lessor recognizes a net investment in the sales-type lease of $62,000, which is equal to the fair value of the equipment at the effective date of the modification, and derecogni…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcc218659dea45c6caa95e9e2bbdaf87a7fe2cba6b22f900af330489564401c7","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-208","para":"55-208","html":"
At the end of Year 1, the lease term is reduced by 2 years, and the lease payments are reduced to $9,000 per year for the remaining 3-year lease term. The estimated residual value is revised to $33,000, of which only $13,000 is guaranteed by an unrelated third party. The fair value of the equipment at the effective date of the modification is $56,000. The modified lease does not transfer the title of the equipment to Lessee or grant Lessee an option to purchase the equipment. The modified lease is classified as an operating lease because it does not meet any of the criteria to be classified as a sales-type lease or as a direct financing lease.
","snippet":"At the end of Year 1, the lease term is reduced by 2 years, and the lease payments are reduced to $9,000 per year for the remaining 3-year lease term. The estimated residual value is revised to $33,000, of which only $13…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:80169cda39f45fc4a1c8cc3c64bf275a06309a15d63499d0a7fb39e309dacf9e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-209","para":"55-209","html":"
Therefore, at the effective date of the modification, Lessor derecognizes the net investment in the lease, which has a carrying amount of $59,133, and recognizes the equipment at that amount. Collectibility of the lease payments is probable; therefore, Lessor will recognize the $27,000 ($9,000 × 3 years) in lease payments on a straight-line basis over the 3-year modified lease term, as well as depreciation on the rerecognized equipment.
","snippet":"Therefore, at the effective date of the modification, Lessor derecognizes the net investment in the lease, which has a carrying amount of $59,133, and recognizes the equipment at that amount. Collectibility of the lease …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4388ec891b2f229601baa3e5022b58147cfd97fce0b10c3442fbc2340c296ed","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-210","para":"55-210","html":"
Examples 23 through 24 illustrate the evaluation of whether a lessee is reasonably certain to exercise an option to purchase the underlying asset.
","snippet":"Examples 23 through 24 illustrate the evaluation of whether a lessee is reasonably certain to exercise an option to purchase the underlying asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f10a68bae8141f710101416603a1680524fc4c6cff7d3268f9db73f4a9144530","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-211","para":"55-211","html":"
Lessee enters into a 5-year lease of equipment with annual lease payments of $59,000, payable at the end of each year. There are no initial direct costs incurred by Lessee or lease incentives. At the end of Year 5, Lessee has an option to purchase the equipment for $5,000. The expected residual value of the equipment at the end of the lease is $75,000. Because the exercise price of the purchase option is significantly discounted from the expected fair value of the equipment at the time the purchase option becomes exercisable, Lessee concludes that it is reasonably certain to exercise the purchase option. The fair value of the equipment at the commencement date is $250,000, and its economic life is 7 years. The discount rate for the lease, which is Lessee's incremental borrowing rate because the rate implicit in the lease is not available, is 6.5 percent.
","snippet":"Lessee enters into a 5-year lease of equipment with annual lease payments of $59,000, payable at the end of each year. There are no initial direct costs incurred by Lessee or lease incentives. At the end of Year 5, Lesse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b7e129a563d91b201590f852aa564e678707fda7f93d91b9872a25b263be2e2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-212","para":"55-212","html":"
Because the lease grants Lessee an option to purchase the underlying asset that it is reasonably certain to exercise, Lessee classifies the lease as a finance lease.
","snippet":"Because the lease grants Lessee an option to purchase the underlying asset that it is reasonably certain to exercise, Lessee classifies the lease as a finance lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53dcb55e0425b76fa0d96919a0fe1fff0b2c66c488e981c0e762a26f1f3c4339","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-213","para":"55-213","html":"
Lessee recognizes the lease liability at the commencement date at $248,834 (the present value of 5 payments of $59,000 + the present value of the $5,000 payment for the purchase option, discounted at 6.5%). Because there are no initial direct costs, lease incentives, or other payments made to Lessor at or before the commencement date, Lessee recognizes the right-of-use asset at the same amount as the lease liability.
","snippet":"Lessee recognizes the lease liability at the commencement date at $248,834 (the present value of 5 payments of $59,000 + the present value of the $5,000 payment for the purchase option, discounted at 6.5%). Because there…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d2a31df244437ac7d30bde244b3422394337ee20a5a27e67b5caecb34f230c4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-214","para":"55-214","html":"
Lessee amortizes the right-of-use asset over the seven-year expected useful life of the equipment, rather than over the lease term of five years, because Lessee is reasonably certain to exercise the option to purchase the equipment. Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset is amortized on a straight-line basis.
","snippet":"Lessee amortizes the right-of-use asset over the seven-year expected useful life of the equipment, rather than over the lease term of five years, because Lessee is reasonably certain to exercise the option to purchase th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fd506a02db4351e362afa3847fc70deebf31cc088f2d9dcd5f8d8c5b2869817c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-215","para":"55-215","html":"
During the first year of the lease, Lessee recognizes interest expense on the lease liability of $16,174 (6.5% × $248,834) and amortization of the right-of-use asset of $35,548 ($248,834 ÷ 7).
","snippet":"During the first year of the lease, Lessee recognizes interest expense on the lease liability of $16,174 (6.5% × $248,834) and amortization of the right-of-use asset of $35,548 ($248,834 ÷ 7).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b1cdc903a0af36f51c44be621d0f86c66b6752f4504a36275ff127fe7b9e481","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-216","para":"55-216","html":"
At the end of Year 1, the right-of-use asset is $213,286 ($248,834 - $35,548), and the lease liability is $206,008 ($248,834 + $16,174 - $59,000).
","snippet":"At the end of Year 1, the right-of-use asset is $213,286 ($248,834 - $35,548), and the lease liability is $206,008 ($248,834 + $16,174 - $59,000).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2a8946f1824a0d354c6638946f09d29914285bfbd1ba13fa7f0898a43f0fe919","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-217","para":"55-217","html":"
At the end of Year 5, the carrying amount of the right-of-use asset is $71,094 ($248,834 - [$35,548 × 5]), and the remaining lease liability is $5,000, which is the exercise price of the purchase option. Lessee exercises the purchase option and settles the remaining lease liability. If the right-of-use asset was not previously presented together with property, plant, and equipment, Lessee reclassifies the right-of-use asset to property, plant, and equipment and applies Topic 360 to the asset beginning on the date the purchase option is exercised.
","snippet":"At the end of Year 5, the carrying amount of the right-of-use asset is $71,094 ($248,834 - [$35,548 × 5]), and the remaining lease liability is $5,000, which is the exercise price of the purchase option. Lessee exercises…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f36f82e90c1180c5f55d69219f7a80b06b688b1d1aa6a36eab5635e40adc1b4e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-218","para":"55-218","html":"
Lessee enters into a 5-year lease of specialized equipment with annual lease payments of $65,000, payable in arrears. There are no initial direct costs or lease incentives. At the end of Year 5, Lessee has an option to purchase the equipment for $90,000, which is the expected fair value of the equipment at that date. Lessor constructed the equipment specifically for the needs of Lessee. Furthermore, the specialized equipment is vital to Lessee's business; without this asset, Lessee would be required to halt operations while a new asset was built or customized. As such, Lessee concludes that it is reasonably certain to exercise the purchase option because the specialized nature, specifications of the asset, and its role in Lessee's operations create a significant economic incentive for Lessee to do so. The fair value of the equipment at the commencement date is $440,000, and its economic life is 10 years. Lessee's incremental borrowing rate is 6.5 percent, which reflects the fixed rate at which Lessee could borrow an amount similar to that of the lease payments ([$65,000 x 5 lease payments] + the $90,000 purchase option exercise price = $415,000) in the same currency, for the same term, and with similar collateral as in the lease at the commencement date.
","snippet":"Lessee enters into a 5-year lease of specialized equipment with annual lease payments of $65,000, payable in arrears. There are no initial direct costs or lease incentives. At the end of Year 5, Lessee has an option to p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4e3d0837db31faeb4a5cec2a0e2b346b61532ff10b5ea74ac75db087738ca720","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-219","para":"55-219","html":"
The lease grants Lessee an option to purchase the underlying asset that it is reasonably certain to exercise. In addition, the underlying asset is of such a specialized nature that it is expected to have no alternative use to Lessor at the end of the lease term. As such, Lessee classifies the lease as a finance lease.
","snippet":"The lease grants Lessee an option to purchase the underlying asset that it is reasonably certain to exercise. In addition, the underlying asset is of such a specialized nature that it is expected to have no alternative u…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:229cf521d10882cc3f097a63df9ba758e2e1feebe9a8b1155cec6700614f0d32","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-220","para":"55-220","html":"
Lessee recognizes the lease liability at the commencement date at $335,808 (the present value of 5 payments of $65,000 + the present value of the $90,000 payment for the purchase option to be made at the end of Year 5, discounted at 6.5%). Because there are no initial direct costs, lease incentives, or other payments made to Lessor at or before the commencement date, Lessee recognizes the right-of-use asset at the same amount as the lease liability.
","snippet":"Lessee recognizes the lease liability at the commencement date at $335,808 (the present value of 5 payments of $65,000 + the present value of the $90,000 payment for the purchase option to be made at the end of Year 5, d…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dab861fe891ee709c8273fbb486f4c7ba119e284a421c394977871e6f1641beb","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-221","para":"55-221","html":"
Lessee amortizes the right-of-use asset over the 10-year expected useful life of the equipment rather than over the lease term of 5 years, because Lessee is reasonably certain to exercise the option to purchase the equipment. Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset is amortized on a straight-line basis.
","snippet":"Lessee amortizes the right-of-use asset over the 10-year expected useful life of the equipment rather than over the lease term of 5 years, because Lessee is reasonably certain to exercise the option to purchase the equip…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e7f133cfb70e15f81f6ded0e4854baaf678bae27d321125610d2484631470cd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-222","para":"55-222","html":"
During the first year of the lease, Lessee recognizes interest expense on the lease liability of $21,828 (6.5% × $335,808) and amortization of the right-of-use asset of $33,581 ($335,808 ÷ 10).
","snippet":"During the first year of the lease, Lessee recognizes interest expense on the lease liability of $21,828 (6.5% × $335,808) and amortization of the right-of-use asset of $33,581 ($335,808 ÷ 10).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb125100530c58b50cef6b9872585c1f6e731c02b53e4c2177dc53f51bd64ca6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-223","para":"55-223","html":"
At the end of Year 1, the right-of-use asset is $302,227 ($335,808 - $33,581), and the lease liability is $292,636 ($335,808 + $21,828 - $65,000).
","snippet":"At the end of Year 1, the right-of-use asset is $302,227 ($335,808 - $33,581), and the lease liability is $292,636 ($335,808 + $21,828 - $65,000).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d57e14a1300238e094ca7ce83b8bf0c21adfd857f8e96bc506c0c51041f1aa5","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-224","para":"55-224","html":"
At the end of Year 5, the carrying amount of the right-of-use asset is $167,903 ($335,808 - $33,581 × 5), and the remaining lease liability is $90,000, which is the amount of the purchase option. Lessee exercises the option to purchase the equipment and settles the remaining lease liability. If the right-of-use asset was not previously presented together with property, plant, and equipment, Lessee reclassifies the right-of-use asset to property, plant, and equipment and will apply Topic 360 to the equipment beginning on the date the purchase option is exercised.
","snippet":"At the end of Year 5, the carrying amount of the right-of-use asset is $167,903 ($335,808 - $33,581 × 5), and the remaining lease liability is $90,000, which is the amount of the purchase option. Lessee exercises the opt…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:33b9d351d5bbf412964ba22379de84f597a744ea86c03a8fedb7cc9cc880cbf4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-225","para":"55-225","html":"
Example 25 illustrates how a lessee accounts for variable lease payments that depend on an index or a rate and variable lease payments that are linked to performance.
","snippet":"Example 25 illustrates how a lessee accounts for variable lease payments that depend on an index or a rate and variable lease payments that are linked to performance.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a15af2bdf175adf4825d634b05b4c9f814adf99d3e6271dfa097e6a4f5a51126","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-226","para":"55-226","html":"
Lessee enters into a 10-year lease of a building with annual lease payments of $100,000, payable at the beginning of each year. The contract specifies that lease payments for each year will increase on the basis of the increase in the Consumer Price Index for the preceding 12 months. The Consumer Price Index at the commencement date is 125. This Example ignores any initial direct costs. The lease is classified as an operating lease.
","snippet":"Lessee enters into a 10-year lease of a building with annual lease payments of $100,000, payable at the beginning of each year. The contract specifies that lease payments for each year will increase on the basis of the i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35393725e56af783541141de43501bec6e9be64b354ca18e093451d1cfee7d8e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-227","para":"55-227","html":"
The rate implicit in the lease is not readily determinable. Lessee's incremental borrowing rate is 8 percent, which reflects the rate at which Lessee could borrow an amount equal to the lease payment in the same currency, over a similar term, and with similar collateral as in the lease.
","snippet":"The rate implicit in the lease is not readily determinable. Lessee's incremental borrowing rate is 8 percent, which reflects the rate at which Lessee could borrow an amount equal to the lease payment in the same currency…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e40eb044cb7879bff2b3ab8b931dd119c110f085f4c15d2334fb07b4aa1837b8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-228","para":"55-228","html":"
At the commencement date, Lessee makes the lease payment for the first year and measures the lease liability at $624,689 (the present value of 9 payments of $100,000 discounted at the rate of 8 percent). The right-of-use asset is equal to the lease liability plus the prepaid rent ($724,689).
","snippet":"At the commencement date, Lessee makes the lease payment for the first year and measures the lease liability at $624,689 (the present value of 9 payments of $100,000 discounted at the rate of 8 percent). The right-of-use…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a092ff978c3f4d7d707fa75a228c9b2af9c9a6c31831989cb3a95bf9136d0922","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-229","para":"55-229","html":"
Lessee prepares financial statements on an annual basis. Lessee determines the cost of the lease to be $1 million (the total lease payments for the lease term). The annual lease expense to be recognized is $100,000 ($1 million ÷ 10 years).
","snippet":"Lessee prepares financial statements on an annual basis. Lessee determines the cost of the lease to be $1 million (the total lease payments for the lease term). The annual lease expense to be recognized is $100,000 ($1 m…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3bb609a07e4e65234196ef3603682caa37f10c1fbec15af2c8b60752f75e9cbd","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-230","para":"55-230","html":"
At the end of the first year of the lease, the Consumer Price Index is 128. Lessee calculates the payment for the second year, adjusted to the Consumer Price Index, to be $102,400 ($100,000 × 128 ÷ 125).
","snippet":"At the end of the first year of the lease, the Consumer Price Index is 128. Lessee calculates the payment for the second year, adjusted to the Consumer Price Index, to be $102,400 ($100,000 × 128 ÷ 125).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7631cf0aa4640d8c659503e9cb960136ebe97e4d45197b2ea8b51526424a33e5","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-231","para":"55-231","html":"
Because Lessee has not remeasured the lease liability for another reason, Lessee does not make an adjustment to the lease liability to reflect the Consumer Price Index at the end of the reporting period; that is, the lease liability continues to reflect annual lease payments of $100,000 (8 remaining annual payments of $100,000, discounted at the rate of 8 percent is $574,664). However, the Year 2 payment amount of $102,400 (the $100,000 annual fixed payment + $2,400 variable lease payment) will be recognized in profit or loss for Year 2 of the lease and classified as cash flow from operations in Lessee's statement of cash flows. In its quantitative disclosures, Lessee will include $100,000 of the $102,400 in its disclosure of operating lease cost and $2,400 in its disclosure of variable lease cost.
","snippet":"Because Lessee has not remeasured the lease liability for another reason, Lessee does not make an adjustment to the lease liability to reflect the Consumer Price Index at the end of the reporting period; that is, the lea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4bc198ff7d551ff89b3c39899182368f7bed99e2210fb0f2df9aaeb51e2a39e2","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-232","para":"55-232","html":"
Lessee enters into a 10-year lease of a building with annual lease payments of $100,000, payable at the beginning of each year. The contract specifies that Lessee also is required to make variable lease payments each year of the lease, which are determined as 2 percent of Lessee's sales generated from the building.
","snippet":"Lessee enters into a 10-year lease of a building with annual lease payments of $100,000, payable at the beginning of each year. The contract specifies that Lessee also is required to make variable lease payments each yea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b99c6204e4e1dbdc18ac30877af6c38c294271ae489dc8d51c92fc8c7f36546f","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-233","para":"55-233","html":"
At the commencement date, Lessee measures the lease liability and right-of-use asset at the same amounts as in Case A (paragraphs
842-10-55-226 through 55-231
) because the 2 percent royalty that will be paid each year to Lessor under the lease is a variable lease payment, which means that payment is not included in the measurement of the lease liability (or the right-of-use asset) at any point during the lease.
","snippet":"At the commencement date, Lessee measures the lease liability and right-of-use asset at the same amounts as in Case A (paragraphs 842-10-55-226 through 55-231) because the 2 percent royalty that will be paid each year to…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04e0f7f6ec4bb649770dd2cbe0ffd369a34451778acb47d4d81739aa31e21ee6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-234","para":"55-234","html":"
During the first year of the lease, Lessee generates sales of $1.2 million from the building and, therefore, recognizes total lease cost of $124,000 ($100,000 + [2% × $1.2 million]). In its quantitative disclosures, Lessee will include $100,000 of the $124,000 in its disclosure of operating lease cost and $24,000 in its disclosure of variable lease cost.
","snippet":"During the first year of the lease, Lessee generates sales of $1.2 million from the building and, therefore, recognizes total lease cost of $124,000 ($100,000 + [2% × $1.2 million]). In its quantitative disclosures, Less…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d4e3f5f1f694b14c8f20205324276568cd2dbc319ff3eb9eec511f7785a386d9","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-235","para":"55-235","html":"
Example 26 illustrates how a lessee accounts for termination penalties.
","snippet":"Example 26 illustrates how a lessee accounts for termination penalties.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78e4c573ea40fc64a8a7f0eac687931926d838f6f175e1911799bb2121ee23e4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-236","para":"55-236","html":"
Lessee enters into a 10-year lease of an asset, which it can terminate at the end of each year beginning at the end of Year 6. Lease payments are $50,000 per year during the 10-year term, payable at the beginning of each year. If Lessee terminates the lease at the end of Year 6, Lessee must pay a penalty to Lessor of $20,000. The termination penalty decreases by $5,000 in each successive year.
","snippet":"Lessee enters into a 10-year lease of an asset, which it can terminate at the end of each year beginning at the end of Year 6. Lease payments are $50,000 per year during the 10-year term, payable at the beginning of each…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba8ceaefd383e93c62c20376a4c73d49c07d9f298a5ad2ad8bf04c694f88c4ed","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-237","para":"55-237","html":"
At the commencement date, Lessee concludes that it is not reasonably certain it will continue to use the underlying asset after Year 6, having considered both the significance of the termination penalty (in absolute terms and in relation to the remaining lease payments after the date the termination option becomes exercisable) and the other factors in paragraph 842-10-55-26.
","snippet":"At the commencement date, Lessee concludes that it is not reasonably certain it will continue to use the underlying asset after Year 6, having considered both the significance of the termination penalty (in absolute term…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6dd79c2638fe3949f501b0ed07f0efbdc1ce9147e357a66939d13c6a97d78725","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-238","para":"55-238","html":"
Accordingly, Lessee determines that the lease term is six years. At the commencement date, Lessee measures the lease liability on the basis of lease payments of $50,000 for 6 years plus the penalty of $20,000 payable at the end of Year 6.
","snippet":"Accordingly, Lessee determines that the lease term is six years. At the commencement date, Lessee measures the lease liability on the basis of lease payments of $50,000 for 6 years plus the penalty of $20,000 payable at …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95827b75b27d2adfa2a36900c7be895dbd7e1fa278da71df5bfaa67daad477fb","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-239","para":"55-239","html":"
Example 27 illustrates initial direct costs.
","snippet":"Example 27 illustrates initial direct costs.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e1356ddc6322497980af4d2947bc53531518368e6c5c041a862683d918aeffc","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-240","para":"55-240","html":"
Lessee and Lessor enter into an operating lease. The following costs are incurred in connection with the lease:
","snippet":"Lessee and Lessor enter into an operating lease. The following costs are incurred in connection with the lease:","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b19ef76c7597439ddbf3b8f96b1a855801b4974f782824d671f2e29063586ad8","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-241","para":"55-241","html":"
Lessor capitalizes initial direct costs of $10,000, which it recognizes ratably over the lease term, consistent with its recognition of lease income. The $10,000 in broker commissions is an initial direct cost because that cost was incurred only as a direct result of obtaining the lease (that is, only as a direct result of the lease being executed). None of the other costs incurred by Lessor meet the definition of initial direct costs because they would have been incurred even if the lease had not been executed. For example, the employee salaries are paid regardless of whether the lease is obtained, and Lessor would be required to pay its attorneys for negotiating and drafting the lease even if Lessee did not execute the lease.
","snippet":"Lessor capitalizes initial direct costs of $10,000, which it recognizes ratably over the lease term, consistent with its recognition of lease income. The $10,000 in broker commissions is an initial direct cost because th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:69deb47da04dd2f162b0e4785e21019862418c36efe4f7b9694026d5b5a99094","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-242","para":"55-242","html":"
Lessee includes $20,000 of initial direct costs in the initial measurement of the right-of-use asset. Lessee amortizes those costs ratably over the lease term as part of its total lease cost. Throughout the lease term, any unamortized amounts from the original $20,000 are included in the measurement of the right-of-use asset. The $20,000 payment to the existing tenant is an initial direct cost because that cost is only incurred upon obtaining the lease; it would not have been owed if the lease had not been executed. None of the other costs incurred by Lessee meet the definition of initial direct costs because they would have been incurred even if the lease had not been executed (for example, the employee salaries are paid regardless of whether the lease is obtained, and Lessee would be required to pay its attorneys for negotiating and drafting the lease even if the lease was not executed).
","snippet":"Lessee includes $20,000 of initial direct costs in the initial measurement of the right-of-use asset. Lessee amortizes those costs ratably over the lease term as part of its total lease cost. Throughout the lease term, a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7ab1e693c6115024e7d0f6bb1761f0287f85a8f7be7c13b81cbaccb4d2318e4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-243","para":"55-243","html":"
Example 28 illustrates lessee accounting for the transition of existing capital leases when an entity elects the transition method in paragraph 842-10-65-1(c)(1).
","snippet":"Example 28 illustrates lessee accounting for the transition of existing capital leases when an entity elects the transition method in paragraph 842-10-65-1(c)(1).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d93bbd8479389fc51084769294643afed01573a1dbed1742e4e14633fb62e62e","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-244","para":"55-244","html":"
The effective date of the guidance in this Topic for Lessee is January 1, 20X4. Lessee enters into a 7-year lease of an asset on January 1, 20X1, with annual lease payments of $25,000 payable at the end of each year. The lease includes a residual value guarantee by Lessee of $8,190. Lessee's incremental borrowing rate on the date of commencement was 6 percent. Lessee accounts for the lease as a capital lease. At lease commencement, Lessee defers initial direct costs of $2,800, which will be amortized over the lease term. On January 1, 20X2 (and before transition adjustments), Lessee has a lease liability of $128,707, a lease asset of $124,434, and unamortized initial direct costs of $2,400.
","snippet":"The effective date of the guidance in this Topic for Lessee is January 1, 20X4. Lessee enters into a 7-year lease of an asset on January 1, 20X1, with annual lease payments of $25,000 payable at the end of each year. The…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77cebf4aea70c73cc823bfbc62d2097836b5e8f4356d08ffce1ce2f6f03adb0d","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-245","para":"55-245","html":"
January 1, 20X2 is the beginning of the earliest comparative period presented in the financial statements in which Lessee first applies the guidance in this Topic. Lessee has elected the package of practical expedients in paragraph 842-10-65-1(f). As such, Lessee accounts for the lease as a finance lease, without reassessing whether the contract contains a lease or whether classification of the lease would be different in accordance with this Topic. Lessee also does not reassess whether the unamortized initial direct costs on January 1, 20X2, would have met the definition of initial direct costs in this Topic at lease commencement.
","snippet":"January 1, 20X2 is the beginning of the earliest comparative period presented in the financial statements in which Lessee first applies the guidance in this Topic. Lessee has elected the package of practical expedients i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2261b93c5f394ce743268bef37c54d16bd9c14c995da13fb5104ad37ab9c6b80","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-246","para":"55-246","html":"
On January 1, 20X2, Lessee recognizes a lease liability at the carrying amount of the capital lease obligation on December 31, 20X1, of $128,707 and a right-of-use asset at the carrying amount of the capital lease asset of $126,834 (which includes unamortized initial direct costs of $2,400 that were included in the capital lease asset). Lessee subsequently measures the lease liability and the right-of-use asset in accordance with Subtopic 840-30 until the effective date.
","snippet":"On January 1, 20X2, Lessee recognizes a lease liability at the carrying amount of the capital lease obligation on December 31, 20X1, of $128,707 and a right-of-use asset at the carrying amount of the capital lease asset …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a12341a7f1cae6bedfb166ab5482338f716b4af00eaf5d32373a4b1154aa5b0","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-247","para":"55-247","html":"
Beginning on the effective date, Lessee applies the subsequent measurement guidance in Section 842-20-35, including the reassessment requirements, except for the requirement to reassess amounts probable of being owed under residual value guarantees. Such amounts will only be reassessed if there is a remeasurement of the lease liability for another reason, including as a result of a lease modification (that is, not accounted for as a separate contract).
","snippet":"Beginning on the effective date, Lessee applies the subsequent measurement guidance in Section 842-20-35, including the reassessment requirements, except for the requirement to reassess amounts probable of being owed und…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56479d5d91f516bfd8468ac10740317ceeb0e2ee4349ceb09c7b0ef303c50ee4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-248","para":"55-248","html":"
Example 29 illustrates lessee accounting for the transition of existing operating leases when an entity elects the transition method in paragraph 842-10-65-1(c)(1).
","snippet":"Example 29 illustrates lessee accounting for the transition of existing operating leases when an entity elects the transition method in paragraph 842-10-65-1(c)(1).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e6fb322c89e67b8f24b56a0a13a637c9ab12fae781fa333f8e7065a2d9db488","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-249","para":"55-249","html":"
The effective date of the guidance in this Topic for Lessee is January 1, 20X4. Lessee enters into a five-year lease of an asset on January 1, 20X1, with annual lease payments payable at the end of each year. Lessee accounts for the lease as an operating lease. At lease commencement, Lessee defers initial direct costs of $500, which will be amortized over the lease term. On January 1, 20X2 (and before transition adjustments), Lessee has an accrued rent liability of $1,200 for the lease, reflecting rent that was previously recognized as an expense but was not yet paid as of that date. Four lease payments (1 payment of $31,000 followed by 3 payments of $33,000) and unamortized initial direct costs of $400 remain.
","snippet":"The effective date of the guidance in this Topic for Lessee is January 1, 20X4. Lessee enters into a five-year lease of an asset on January 1, 20X1, with annual lease payments payable at the end of each year. Lessee acco…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:484eef5ba3d05fd014f25e5a87d8a4fa62bd13e6f64e21c0c2bd658e140d0df1","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-250","para":"55-250","html":"
January 1, 20X2 is the beginning of the earliest comparative period presented in the financial statements in which Lessee first applies the guidance in this Topic. On January 1, 20X2, Lessee's incremental borrowing rate is 6 percent. Lessee has elected the package of practical expedients in paragraph 842-10-65-1(f). As such, Lessee accounts for the lease as an operating lease, without reassessing whether the contract contains a lease or whether classification of the lease would be different in accordance with this Topic. Lessee also does not reassess whether the unamortized initial direct costs on January 1, 20X2, would have met the definition of initial direct costs in this Topic at lease commencement.
","snippet":"January 1, 20X2 is the beginning of the earliest comparative period presented in the financial statements in which Lessee first applies the guidance in this Topic. On January 1, 20X2, Lessee's incremental borrowing rate …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c54b752a3e950db246104a86ba9b951cacb662d70e44d9a31319709485a3fa7b","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-251","para":"55-251","html":"
On January 1, 20X2, Lessee measures the lease liability at $112,462, which is the present value of 1 payment of $31,000 and 3 payments of $33,000 discounted using the rate of 6 percent. The right-of-use asset is equal to the lease liability before adjustment for accrued rent and unamortized initial direct costs, which were not reassessed because Lessee elected the practical expedients in paragraph 842-10-65-1(f).
","snippet":"On January 1, 20X2, Lessee measures the lease liability at $112,462, which is the present value of 1 payment of $31,000 and 3 payments of $33,000 discounted using the rate of 6 percent. The right-of-use asset is equal to…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fac79f5dc3732bac77a35bf18c9459a79f1a12d84df3137196ffe5cad9ad4bb6","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-252","para":"55-252","html":"
On January 1, 20X2, Lessee recognizes a lease liability of $112,462 and a right-of-use asset of $111,662 ($112,462 - $1,200 + $400).
","snippet":"On January 1, 20X2, Lessee recognizes a lease liability of $112,462 and a right-of-use asset of $111,662 ($112,462 - $1,200 + $400).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bd9051ca49cb858f7988cad48aedca302f129cdbd101319c4bcac5bd97a69d42","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-253","para":"55-253","html":"
From the transition date (January 1, 20X2) on, Lessee will continue to measure and recognize the lease liability at the present value of the sum of the remaining minimum rental payments (as that term was applied under Topic 840) and the right-of-use asset in accordance with this Topic.
","snippet":"From the transition date (January 1, 20X2) on, Lessee will continue to measure and recognize the lease liability at the present value of the sum of the remaining minimum rental payments (as that term was applied under To…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54026e79dff5d53059705c999595460b16fb0beef6d6745104cc2f25f8a3ebe4","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},{"citation":"842-10-55-254","para":"55-254","html":"
Beginning on the effective date of January 1, 20X4, Lessee applies the subsequent measurement guidance in Section 842-20-35, including the reassessment requirements.
","snippet":"Beginning on the effective date of January 1, 20X4, Lessee applies the subsequent measurement guidance in Section 842-20-35, including the reassessment requirements.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cb1e02aa239c4a9cff06e63b83cf4f7c03c079119678c474321efcb573d45b6c","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4773efe16fa7955128573330e6f62c50112b9ade8436a28c5042c9987770ca5","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06c44e78d12168c350e1bdc8895113e0e3547c91eb083e7d343e9e0f1795a8bc","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06c44e78d12168c350e1bdc8895113e0e3547c91eb083e7d343e9e0f1795a8bc","downloaded_from":"2026-09-10T01:56:11.051Z","last_downloaded_at":"2026-09-10T01:56:11.051Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479863","source_sha256":"2f0e1d9bad55abc472e5fb5b67833629517c859d8c2230d6c0c881754c87bc6f"}}