{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/842/","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.","number":"842","title":"Leases","area":"Broad Transactions","group":null,"subtopics":[{"number":"842-10","topic":"842","title":"Overall","area":"Broad Transactions","paragraphs":356,"summary":"ASC 842-10 sets the scope and core mechanics common to all leases: how to decide whether a contract is or contains a lease, how to identify and separate lease and nonlease components and allocate consideration, how to classify the lease (finance/sales-type, direct financing, or operating), and how to determine lease term and lease payments. A contract contains a lease if it conveys the right to control the use of an identified item of property, plant, or equipment for a period of time in exchange for consideration — meaning the customer has both the right to obtain substantially all the economic benefits from use and the right to direct the use of that asset (842-10-15-3, 15-4). Classification is made once at the commencement date and is reassessed only on a modification not accounted for as a separate contract (or, for lessees, a change in lease term or purchase option assessment) (842-10-25-1).","concepts":["identified asset","right to control the use","substantive substitution right","separate lease component","nonlease component allocation","lease classification criteria","lease term and renewal options","lease payments and residual value guarantees"],"categories":["Leases","Recognition","Initial measurement","Presentation"],"level":"intermediate","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-10-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAddedAccounting Standards Update No. 2016-0202/25/2016
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
AcquirerAddedAccounting Standards Update No. 2016-0202/25/2016
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Advance RefundingAddedAccounting Standards Update No. 2016-0202/25/2016
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAddedAccounting Standards Update No. 2016-0202/25/2016
Business CombinationAddedAccounting Standards Update No. 2016-0202/25/2016
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
Consideration in the ContractAddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Discount Rate for the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Economic LifeAddedAccounting Standards Update No. 2016-0202/25/2016
Effective Date of the ModificationAddedAccounting Standards Update No. 2016-0202/25/2016
Fair Value (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Fiscal Funding ClauseAddedAccounting Standards Update No. 2016-0202/25/2016
Incremental Borrowing RateAddedAccounting Standards Update No. 2016-0202/25/2016
Initial Direct CostsAddedAccounting Standards Update No. 2016-0202/25/2016
InventoryAddedAccounting Standards Update No. 2016-0202/25/2016
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease LiabilityAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ModificationAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ReceivableAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
Legal EntityAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Leveraged LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Market ParticipantsAddedAccounting Standards Update No. 2016-0202/25/2016
Net Investment in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Orderly TransactionAddedAccounting Standards Update No. 2016-0202/25/2016
PenaltyAddedAccounting Standards Update No. 2016-0202/25/2016
Period of UseAddedAccounting Standards Update No. 2016-0202/25/2016
Probable (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Public Business EntityAmendedMaintenance Update 2017-06 (PDF)04/07/2017
Public Business EntityAmendedMaintenance Update 2016-11 (PDF)06/27/2016
Public Business EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Rate Implicit in the LeaseAmendedAccounting Standards Update No. 2018-1007/18/2018
Rate Implicit in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Related PartiesAddedAccounting Standards Update No. 2016-0202/25/2016
RemoteAddedAccounting Standards Update No. 2016-0202/25/2016
Residual Value GuaranteeAddedAccounting Standards Update No. 2016-0202/25/2016
Right-of-Use AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Selling Profit or Selling LossAddedAccounting Standards Update No. 2016-0202/25/2016
Short-Term LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Standalone PriceAddedAccounting Standards Update No. 2016-0202/25/2016
SubleaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Unguaranteed Residual AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
Variable Interest EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
WarrantyAddedAccounting Standards Update No. 2016-0202/25/2016
842-10-05-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-05-2AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-10-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-10-2AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-15-1 through 15-43
AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-15-3A through 15-3C
AddedAccounting Standards Update No. 2023-0103/27/2023
842-10-15-30AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-15-31AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-15-38AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-15-39AAddedAccounting Standards Update No. 2018-2012/10/2018
842-10-15-40AmendedAccounting Standards Update No. 2018-2012/10/2018
842-10-15-40AAddedAccounting Standards Update No. 2018-2012/10/2018
842-10-15-42AAmendedAccounting Standards Update No. 2021-0507/19/2021
842-10-15-42A through 15-42C
AddedAccounting Standards Update No. 2018-1107/30/2018
842-10-25-1AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-25-1 through 25-19
AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-25-2AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-25-3AAddedAccounting Standards Update No. 2021-0507/19/2021
842-10-25-9AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-30-1 through 30-10
AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-30-6AmendedAccounting Standards Update No. 2023-0103/27/2023
842-10-35-1 through 35-6
AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-35-3 through 35-5
AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-55-1 through 55-254
AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-55-8AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-55-11AmendedAccounting Standards Update No. 2023-0508/23/2023
842-10-55-12AmendedAccounting Standards Update No. 2023-0103/27/2023
842-10-55-24AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-55-30AmendedMaintenance Update 2018-02 (PDF)02/02/2018
842-10-55-134AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-55-141AmendedAccounting Standards Update No. 2018-2012/10/2018
842-10-55-142AmendedAccounting Standards Update No. 2018-2012/10/2018
842-10-55-145AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-55-152AmendedAccounting Standards Update No. 2018-2012/10/2018
842-10-55-243AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-55-248AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-65-1AmendedAccounting Standards Update No. 2023-0103/27/2023
842-10-65-1AmendedAccounting Standards Update No. 2021-0911/11/2021
842-10-65-1AmendedAccounting Standards Update No. 2020-0506/03/2020
842-10-65-1AmendedAccounting Standards Update No. 2019-1011/15/2019
842-10-65-1AmendedAccounting Standards Update No. 2019-0103/05/2019
842-10-65-1AmendedAccounting Standards Update No. 2018-1107/30/2018
842-10-65-1AmendedAccounting Standards Update No. 2018-1007/18/2018
842-10-65-1AmendedMaintenance Update 2018-02 (PDF)02/02/2018
842-10-65-1AmendedAccounting Standards Update No. 2018-0101/25/2018
842-10-65-1AmendedAccounting Standards Update No. 2017-1309/29/2017
842-10-65-1AmendedAccounting Standards Update No. 2017-0301/23/2017
842-10-65-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-10-65-2AddedAccounting Standards Update No. 2018-1107/30/2018
842-10-65-3AddedAccounting Standards Update No. 2018-2012/10/2018
842-10-65-4AmendedAccounting Standards Update No. 2020-0506/03/2020
842-10-65-4AmendedAccounting Standards Update No. 2019-1011/15/2019
842-10-65-4AddedAccounting Standards Update No. 2019-0103/05/2019
842-10-65-5AddedAccounting Standards Update No. 2021-0507/19/2021
842-10-65-6AddedAccounting Standards Update No. 2021-0911/11/2021
842-10-65-7AddedAccounting Standards Update No. 2023-0103/27/2023
842-10-65-8AddedAccounting Standards Update No. 2023-0103/27/2023
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nAcquiree | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nAcquirer | Ame…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ae9744fc4f22e2b8eec82c9116e300aff0f87e6f7ac4b235c64cdd22cffc49b7","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:55:43.879Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479211","source_sha256":"97b078cf153fbd5a0a6417bdafa12edbdafad42a172283f37006314813e24969"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8d711ad07769f83f9e34ee478da4f0628d52344d45898d3851abf154d932166b","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:55:43.879Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479211","source_sha256":"97b078cf153fbd5a0a6417bdafa12edbdafad42a172283f37006314813e24969"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c96f3b5f7a44e88dfc8b05a6ac6bce6fcd37c28d317979e2257289094712a25f","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:55:43.879Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479211","source_sha256":"97b078cf153fbd5a0a6417bdafa12edbdafad42a172283f37006314813e24969"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-10-05-1","para":"05-1","html":"
The Leases Topic includes the following Subtopics:
  1. a
    Overall
  2. b
    Lessee
  3. c
    Lessor
  4. d
    Sale and Leaseback Transactions
  5. e
    Leveraged Lease Arrangements
","snippet":"The Leases Topic includes the following Subtopics:\n(a) Overall\n(b) Lessee\n(c) Lessor\n(d) Sale and Leaseback Transactions\n(e) Leveraged Lease Arrangements","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2da4aacb696b5378acfe2d490a76608a660d881d84ec9a2a5e0961ace98980c","downloaded_from":"2026-09-10T01:55:47.728Z","last_downloaded_at":"2026-09-10T01:55:47.728Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479186","source_sha256":"2e616324f41c0cebd84d745bc12ad05366f747a47c1c1963e28b9431c80906df"}},{"citation":"842-10-05-2","para":"05-2","html":"
The Subtopics listed in paragraph 842-10-05-1 establish the requirements of financial accounting and reporting for lessees and lessors.
","snippet":"The Subtopics listed in paragraph 842-10-05-1 establish the requirements of financial accounting and reporting for lessees and lessors.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:640bf024db63ec3fd0b45d6399350799810c9a6ecc91127cac93d2d9e7b91c8e","downloaded_from":"2026-09-10T01:55:47.728Z","last_downloaded_at":"2026-09-10T01:55:47.728Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479186","source_sha256":"2e616324f41c0cebd84d745bc12ad05366f747a47c1c1963e28b9431c80906df"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a536643a5d04a855a5bac51726f5284b20b3f5ce842c35e17512af755932053f","downloaded_from":"2026-09-10T01:55:47.728Z","last_downloaded_at":"2026-09-10T01:55:47.728Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479186","source_sha256":"2e616324f41c0cebd84d745bc12ad05366f747a47c1c1963e28b9431c80906df"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a0c7e5331629086b6068817e05f0a281be13b6a55de3ce2886f6b159fdd58fb7","downloaded_from":"2026-09-10T01:55:47.728Z","last_downloaded_at":"2026-09-10T01:55:47.728Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479186","source_sha256":"2e616324f41c0cebd84d745bc12ad05366f747a47c1c1963e28b9431c80906df"}},{"number":"10","label":"10 Objectives","anchor":"10-objectives","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-10-10-1","para":"10-1","html":"
This Topic specifies the accounting for leases. An entity should consider the terms and conditions of the contract and all relevant facts and circumstances when applying this Topic. An entity should apply this Topic consistently to leases with similar characteristics and in similar circumstances.
","snippet":"This Topic specifies the accounting for leases. An entity should consider the terms and conditions of the contract and all relevant facts and circumstances when applying this Topic. An entity should apply this Topic cons…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:91659e4cd89094363310ef12956bee081c4ce276ebaaac3a682016a45ac6e1e0","downloaded_from":"2026-09-10T01:55:49.595Z","last_downloaded_at":"2026-09-10T01:55:49.595Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479159","source_sha256":"75646fcfe64288af8f8814f00210698b534f520dcb5f9f065306970c949a6528"}},{"citation":"842-10-10-2","para":"10-2","html":"
The objective of this Topic is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arising from a lease.
","snippet":"The objective of this Topic is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about the amount, timing, and uncertainty of cash flows arisin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5c379acbe6dfc98570d0a17b99688c1a7f2635e4d3904cfeed90aa75ed022610","downloaded_from":"2026-09-10T01:55:49.595Z","last_downloaded_at":"2026-09-10T01:55:49.595Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479159","source_sha256":"75646fcfe64288af8f8814f00210698b534f520dcb5f9f065306970c949a6528"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6211249026425f7d821b0725a68a401555fe8428dc018f1955693bc7dbf7cac9","downloaded_from":"2026-09-10T01:55:49.595Z","last_downloaded_at":"2026-09-10T01:55:49.595Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479159","source_sha256":"75646fcfe64288af8f8814f00210698b534f520dcb5f9f065306970c949a6528"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61cff63327b3c337b85480736f46d4fdc577809edbaf21d77f448c1484fff8d8","downloaded_from":"2026-09-10T01:55:49.595Z","last_downloaded_at":"2026-09-10T01:55:49.595Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479159","source_sha256":"75646fcfe64288af8f8814f00210698b534f520dcb5f9f065306970c949a6528"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-10-15-1","para":"15-1","html":"
An entity shall apply this Topic to all leases, including subleases. Because a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration, this Topic does not apply to any of the following:
  1. a
    Leases of intangible assets (see Topic 350, Intangibles—Goodwill and Other).
  2. b
    Leases to explore for or use minerals, oil, natural gas, and similar nonregenerative resources (see Topics 930, Extractive Activities—Mining, and 932, Extractive Activities—Oil and Gas). This includes the intangible right to explore for those natural resources and rights to use the land in which those natural resources are contained (that is, unless those rights of use include more than the right to explore for natural resources), but not equipment used to explore for the natural resources.
  3. c
    Leases of biological assets, including timber (see Topic 905, Agriculture).
  4. d
    Leases of inventory (see Topic 330, Inventory).
  5. e
    Leases of assets under construction (see Topic 360, Property, Plant, and Equipment).
","snippet":"An entity shall apply this Topic to all leases, including subleases. Because a lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0faff5ddd094006d9f4daff92701452d7618ff922533edb93b8a9d6ab45a1acf","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f746a8ea412fbc1b14161ba24169ecede673e8e35c4919d2cca36e2917d21a94","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"block":null,"heading":"Identifying a Lease","paragraphs":[{"citation":"842-10-15-2","para":"15-2","html":"
At inception of a contract, an entity shall determine whether that contract is or contains a lease.
","snippet":"At inception of a contract, an entity shall determine whether that contract is or contains a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2655bcac913fd8d8d9252d2b78aee98eb85192a62ec76e8aac278e2ae34a71bd","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-3","para":"15-3","html":"
A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. A period of time may be described in terms of the amount of use of an identified asset (for example, the number of production units that an item of equipment will be used to produce).
","snippet":"A contract is or contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. A period of tim…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:02be858e42f05f11b5f26f19965e0548a3478329d64f96bad283368b7b4286c5","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-3A","para":"15-3A","html":"
As a practical expedient, an entity that is not a public business entity; a not-for-profit entity that has issued or is a conduit bond obligor for securities that are traded, listed, or quoted on an exchange or an over-the-counter market; or an employee benefit plan that files or furnishes financial statements with or to the U.S. Securities and Exchange Commission may use the written terms and conditions of a related party arrangement between entities under common control to determine whether that arrangement is or contains a lease. For purposes of determining whether a lease exists under this practical expedient, an entity shall determine whether written terms and conditions convey the practical (as opposed to enforceable) right to control the use of an identified asset for a period of time in exchange for consideration. If an entity determines that a lease exists, the entity shall classify and account for that lease on the basis of those written terms and conditions. An entity may elect the practical expedient on an arrangement-by-arrangement basis.
","snippet":"As a practical expedient, an entity that is not a public business entity; a not-for-profit entity that has issued or is a conduit bond obligor for securities that are traded, listed, or quoted on an exchange or an over-t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:17bc8460d4ddff286496daa8f1596ed86f8c88b0017efeefbfe2102d8427155b","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-3B","para":"15-3B","html":"
If no written terms or conditions exist, an entity shall not apply the practical expedient in paragraph 842-10-15-3A. Rather, the entity shall determine whether the related party arrangement between entities under common control is or contains a lease in accordance with paragraph 842-10-15-3 and, if so, classify and account for that lease on the basis of its legally enforceable terms and conditions in accordance with paragraph 842-10-55-12.
","snippet":"If no written terms or conditions exist, an entity shall not apply the practical expedient in paragraph 842-10-15-3A. Rather, the entity shall determine whether the related party arrangement between entities under common…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d31966d54c9e9dbcc57e7f0b30b3b7947e9b5e75ab02ef39c69bf1ed3d45fa2","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-3C","para":"15-3C","html":"
If after an entity has applied the practical expedient in paragraph 842-10-15-3A an arrangement is no longer between entities under common control, the entity shall determine whether a lease exists in accordance with paragraph 842-10-15-3.
  1. a
    If the arrangement was previously determined to be a lease and continues to be a lease, the entity shall classify and account for the lease on the basis of the enforceable terms and conditions. If the enforceable terms and conditions differ from the written terms and conditions previously used to apply paragraph 842-10-15-3A, the entity shall apply the modification requirements in paragraphs
    842-10-25-9 through 25-17
    using the enforceable terms and conditions. If the enforceable terms and conditions are the same as the written terms and conditions previously used to apply paragraph 842-10-15-3A, the modification requirements in those paragraphs are not applicable.
  2. b
    If the arrangement was previously not determined to be a lease and is determined to be a lease, the entity shall account for the arrangement as a new lease.
  3. c
    If the arrangement was previously determined to be a lease and the lease ceases to exist:
    1. 1
      A lessee shall apply the derecognition requirements for fully terminated leases in paragraph 842-20-40-1.
    2. 2
      A lessor with a lease previously classified as a sales-type lease or a direct financing lease shall apply the derecognition requirements for terminated leases in paragraph 842-30-40-2.
    3. 3
      A lessor with a lease previously classified as an operating lease shall derecognize any amounts that would not exist if the arrangement was not accounted for as a lease and account for the arrangement in accordance with other generally accepted accounting principles (GAAP).
","snippet":"If after an entity has applied the practical expedient in paragraph 842-10-15-3A an arrangement is no longer between entities under common control, the entity shall determine whether a lease exists in accordance with par…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5891d3e30108f641ea86d56ce237798234984fc67ad49fddf4888df5bb90eff2","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-4","para":"15-4","html":"
To determine whether a contract conveys the right to control the use of an identified asset (see paragraphs
842-10-15-17 through 15-26
) for a period of time, an entity shall assess whether, throughout the period of use, the customer has both of the following:
  1. a
    The right to obtain substantially all of the economic benefits from use of the identified asset (see paragraphs
    842-10-15-17 through 15-19
    )
  2. b
    The right to direct the use of the identified asset (see paragraphs
    842-10-15-20 through 15-26
    ).
If the customer in the contract is a joint operation or a joint arrangement, an entity shall consider whether the joint operation or joint arrangement has the right to control the use of an identified asset throughout the period of use.
","snippet":"To determine whether a contract conveys the right to control the use of an identified asset (see paragraphs 842-10-15-17 through 15-26) for a period of time, an entity shall assess whether, throughout the period of use, …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:37a1f8c6c30d8697be6b229c2a94d066fc5cb5b27d1dd01f7be49751b5a4b569","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-5","para":"15-5","html":"
If the customer has the right to control the use of an identified asset for only a portion of the term of the contract, the contract contains a lease for that portion of the term.
","snippet":"If the customer has the right to control the use of an identified asset for only a portion of the term of the contract, the contract contains a lease for that portion of the term.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4acbd4da0c2cb06640fa134e525ce893eb8e9be9c5688da8853cf4e7554b6d27","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-6","para":"15-6","html":"
An entity shall reassess whether a contract is or contains a lease only if the terms and conditions of the contract are changed.
","snippet":"An entity shall reassess whether a contract is or contains a lease only if the terms and conditions of the contract are changed.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c0341d367c0302c986ebee6a71c7c4b36e7f7689c6f41dcf1a9338e242f2601","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-7","para":"15-7","html":"
In making the determination about whether a contract is or contains a lease, an entity shall consider all relevant facts and circumstances.
","snippet":"In making the determination about whether a contract is or contains a lease, an entity shall consider all relevant facts and circumstances.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90adb358fb9ee6511a902d09ec6e252ed225ba134a932acbe836cc88f2edc521","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-8","para":"15-8","html":"
Paragraph 842-10-55-1 includes a flowchart that depicts the decision process for evaluating whether a contract is or contains a lease.
","snippet":"Paragraph 842-10-55-1 includes a flowchart that depicts the decision process for evaluating whether a contract is or contains a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fbbc4f9c5ca663aea250d0ef93e9bcb469d9dbe5d52382e8bc877e56518f41b1","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-9","para":"15-9","html":"
An asset typically is identified by being explicitly specified in a contract. However, an asset also can be identified by being implicitly specified at the time that the asset is made available for use by the customer.
","snippet":"An asset typically is identified by being explicitly specified in a contract. However, an asset also can be identified by being implicitly specified at the time that the asset is made available for use by the customer.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b362d6c50573a322d58204e5fc0d9ec441424c5445dede30ff4e9c0250a3718","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-10","para":"15-10","html":"
Even if an asset is specified, a customer does not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use. A supplier's right to substitute an asset is substantive only if both of the following conditions exist:
  1. a
    The supplier has the practical ability to substitute alternative assets throughout the period of use (for example, the customer cannot prevent the supplier from substituting an asset, and alternative assets are readily available to the supplier or could be sourced by the supplier within a reasonable period of time).
  2. b
    The supplier would benefit economically from the exercise of its right to substitute the asset (that is, the economic benefits associated with substituting the asset are expected to exceed the costs associated with substituting the asset).
","snippet":"Even if an asset is specified, a customer does not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use. A supplier's right to substitut…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6beb36effc0f23f84af58e878855f211905057570e8e41d5a2532256c0722bfe","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-11","para":"15-11","html":"
An entity's evaluation of whether a supplier's substitution right is substantive is based on facts and circumstances at inception of the contract and shall exclude consideration of future events that, at inception, are not considered likely to occur. Examples of future events that, at inception of the contract, would not be considered likely to occur and, thus, should be excluded from the evaluation include, but are not limited to, the following:
  1. a
    An agreement by a future customer to pay an above-market rate for use of the asset
  2. b
    The introduction of new technology that is not substantially developed at inception of the contract
  3. c
    A substantial difference between the customer's use of the asset, or the performance of the asset and the use or performance considered likely at inception of the contract
  4. d
    A substantial difference between the market price of the asset during the period of use and the market price considered likely at inception of the contract.
","snippet":"An entity's evaluation of whether a supplier's substitution right is substantive is based on facts and circumstances at inception of the contract and shall exclude consideration of future events that, at inception, are n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75257df6f5932f6211a914075003e4f099bdcf2ab651a3eb88902d5954e5bba4","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-12","para":"15-12","html":"
If the asset is located at the customer's premises or elsewhere, the costs associated with substitution are generally higher than when located at the supplier's premises and, therefore, are more likely to exceed the benefits associated with substituting the asset.
","snippet":"If the asset is located at the customer's premises or elsewhere, the costs associated with substitution are generally higher than when located at the supplier's premises and, therefore, are more likely to exceed the bene…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77874c892a18ec0acdfb90c2084f4c7b1037b6d0b613843f3eb73c1a31657107","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-13","para":"15-13","html":"
If the supplier has a right or an obligation to substitute the asset only on or after either a particular date or the occurrence of a specified event, the supplier does not have the practical ability to substitute alternative assets throughout the period of use.
","snippet":"If the supplier has a right or an obligation to substitute the asset only on or after either a particular date or the occurrence of a specified event, the supplier does not have the practical ability to substitute altern…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b148eb4ae80dd9ad659a76546ba9a8c4f19e9fc8779319b4e0f6293c62acc635","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-14","para":"15-14","html":"
The supplier's right or obligation to substitute an asset for repairs or maintenance, if the asset is not operating properly, or if a technical upgrade becomes available, does not preclude the customer from having the right to use an identified asset.
","snippet":"The supplier's right or obligation to substitute an asset for repairs or maintenance, if the asset is not operating properly, or if a technical upgrade becomes available, does not preclude the customer from having the ri…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3ef1c42ee6323d21cd50aa59535758993a31aa3ae364c3abeb61a6ed9aee0d5a","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-15","para":"15-15","html":"
If the customer cannot readily determine whether the supplier has a substantive substitution right, the customer shall presume that any substitution right is not substantive.
","snippet":"If the customer cannot readily determine whether the supplier has a substantive substitution right, the customer shall presume that any substitution right is not substantive.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9249c38d19559cef1f1637d99871bb9f503c90df38ac3ea9d96e736a883dc7f2","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-16","para":"15-16","html":"
A capacity portion of an asset is an identified asset if it is physically distinct (for example, a floor of a building or a segment of a pipeline that connects a single customer to the larger pipeline). A capacity or other portion of an asset that is not physically distinct (for example, a capacity portion of a fiber optic cable) is not an identified asset, unless it represents substantially all of the capacity of the asset and thereby provides the customer with the right to obtain substantially all of the economic benefits from use of the asset.
","snippet":"A capacity portion of an asset is an identified asset if it is physically distinct (for example, a floor of a building or a segment of a pipeline that connects a single customer to the larger pipeline). A capacity or oth…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4f6751267e1c8a46e729f4630ecc1915fccf804e8712dc42b71e6baf42962a7","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-17","para":"15-17","html":"
To control the use of an identified asset, a customer is required to have the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use (for example, by having exclusive use of the asset throughout that period). A customer can obtain economic benefits from use of an asset directly or indirectly in many ways, such as by using, holding, or subleasing the asset. The economic benefits from use of an asset include its primary output and by-products (including potential cash flows derived from these items) and other economic benefits from using the asset that could be realized from a commercial transaction with a third party.
","snippet":"To control the use of an identified asset, a customer is required to have the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use (for example, by having exclusiv…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:701a6ff2b7ab770e532ed2c558e39b7397c55104bc9eea57df229d2ca9c6cdc9","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-18","para":"15-18","html":"
When assessing the right to obtain substantially all of the economic benefits from use of an asset, an entity shall consider the economic benefits that result from use of the asset within the defined scope of a customer's right to use the asset in the contract (see paragraph 842-10-15-23). For example:
  1. a
    If a contract limits the use of a motor vehicle to only one particular territory during the period of use, an entity shall consider only the economic benefits from use of the motor vehicle within that territory and not beyond.
  2. b
    If a contract specifies that a customer can drive a motor vehicle only up to a particular number of miles during the period of use, an entity shall consider only the economic benefits from use of the motor vehicle for the permitted mileage and not beyond.
","snippet":"When assessing the right to obtain substantially all of the economic benefits from use of an asset, an entity shall consider the economic benefits that result from use of the asset within the defined scope of a customer'…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7b9e0647b8f0b9fefcb882e832701cdb2576c432146fc4f9ada88e23cdba63a1","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-19","para":"15-19","html":"
If a contract requires a customer to pay the supplier or another party a portion of the cash flows derived from use of an asset as consideration, those cash flows paid as consideration shall be considered to be part of the economic benefits that the customer obtains from use of the asset. For example, if a customer is required to pay the supplier a percentage of sales from use of retail space as consideration for that use, that requirement does not prevent the customer from having the right to obtain substantially all of the economic benefits from use of the retail space. That is because the cash flows arising from those sales are considered to be economic benefits that the customer obtains from use of the retail space, a portion of which it then pays to the supplier as consideration for the right to use that space.
","snippet":"If a contract requires a customer to pay the supplier or another party a portion of the cash flows derived from use of an asset as consideration, those cash flows paid as consideration shall be considered to be part of t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:455cc8fc65e842c975abc7f9757649a7d396e1209451d86c560b5adc629b6049","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-20","para":"15-20","html":"
A customer has the right to direct the use of an identified asset throughout the period of use in either of the following situations:
  1. a
    The customer has the right to direct how and for what purpose the asset is used throughout the period of use (as described in paragraphs
    842-10-15-24 through 15-26
    ).
  2. b
    The relevant decisions about how and for what purpose the asset is used are predetermined (see paragraph 842-10-15-21) and at least one of the following conditions exists:
    1. 1
      The customer has the right to operate the asset (or to direct others to operate the asset in a manner that it determines) throughout the period of use without the supplier having the right to change those operating instructions.
    2. 2
      The customer designed the asset (or specific aspects of the asset) in a way that predetermines how and for what purpose the asset will be used throughout the period of use.
","snippet":"A customer has the right to direct the use of an identified asset throughout the period of use in either of the following situations:\n(a) The customer has the right to direct how and for what purpose the asset is used th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3f332e72e4fca73dd7fb43c9a57c8951a88b78178901c74f50f11b4218dbd4f","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-21","para":"15-21","html":"
The relevant decisions about how and for what purpose an asset is used can be predetermined in a number of ways. For example, the relevant decisions can be predetermined by the design of the asset or by contractual restrictions on the use of the asset.
","snippet":"The relevant decisions about how and for what purpose an asset is used can be predetermined in a number of ways. For example, the relevant decisions can be predetermined by the design of the asset or by contractual restr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ee59886a1739fe75c98997c77782bed0f13e5ad8606c0aae290321b0e2a6640f","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-22","para":"15-22","html":"
In assessing whether a customer has the right to direct the use of an asset, an entity shall consider only rights to make decisions about the use of the asset during the period of use unless the customer designed the asset (or specific aspects of the asset) in accordance with paragraph 842-10-15-20(b)(2). Consequently, unless that condition exists, an entity shall not consider decisions that are predetermined before the period of use. For example, if a customer is able only to specify the output of an asset before the period of use, the customer does not have the right to direct the use of that asset. The ability to specify the output in a contract before the period of use, without any other decision-making rights relating to the use of the asset, gives a customer the same rights as any customer that purchases goods or services.
","snippet":"In assessing whether a customer has the right to direct the use of an asset, an entity shall consider only rights to make decisions about the use of the asset during the period of use unless the customer designed the ass…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:398051d8bfdcd980ac2c41ba6c471e3a2ea065a3240a9ac0e99b3e2e378e67ce","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-23","para":"15-23","html":"
A contract may include terms and conditions designed to protect the supplier's interest in the asset or other assets, to protect its personnel, or to ensure the supplier's compliance with laws or regulations. These are examples of protective rights. For example, a contract may specify the maximum amount of use of an asset or limit where or when the customer can use the asset, may require a customer to follow particular operating practices, or may require a customer to inform the supplier of changes in how an asset will be used. Protective rights typically define the scope of the customer's right of use but do not, in isolation, prevent the customer from having the right to direct the use of an asset.
","snippet":"A contract may include terms and conditions designed to protect the supplier's interest in the asset or other assets, to protect its personnel, or to ensure the supplier's compliance with laws or regulations. These are e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61d8ec54985154d1c1b2db0e6dfd3a00c284923ab05c2e0d661472d821e90648","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-24","para":"15-24","html":"
A customer has the right to direct how and for what purpose an asset is used throughout the period of use if, within the scope of its right of use defined in the contract, it can change how and for what purpose the asset is used throughout that period. In making this assessment, an entity considers the decision-making rights that are most relevant to changing how and for what purpose an asset is used throughout the period of use. Decision-making rights are relevant when they affect the economic benefits to be derived from use. The decision-making rights that are most relevant are likely to be different for different contracts, depending on the nature of the asset and the terms and conditions of the contract.
","snippet":"A customer has the right to direct how and for what purpose an asset is used throughout the period of use if, within the scope of its right of use defined in the contract, it can change how and for what purpose the asset…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9217c51274e3df114685a9f308ef381afa28cb989c5876cc908850ddb6cc557b","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-25","para":"15-25","html":"
Examples of decision-making rights that, depending on the circumstances, grant the right to direct how and for what purpose an asset is used, within the defined scope of the customer's right of use, include the following:
  1. a
    The right to change the type of output that is produced by the asset (for example, deciding whether to use a shipping container to transport goods or for storage, or deciding on the mix of products sold from a retail unit)
  2. b
    The right to change when the output is produced (for example, deciding when an item of machinery or a power plant will be used)
  3. c
    The right to change where the output is produced (for example, deciding on the destination of a truck or a ship or deciding where a piece of equipment is used or deployed)
  4. d
    The right to change whether the output is produced and the quantity of that output (for example, deciding whether to produce energy from a power plant and how much energy to produce from that power plant).
","snippet":"Examples of decision-making rights that, depending on the circumstances, grant the right to direct how and for what purpose an asset is used, within the defined scope of the customer's right of use, include the following…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2fa469442255604305941e02520d16833e68116c9cb23a80f9f761bf4f1598b2","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-26","para":"15-26","html":"
Examples of decision-making rights that do not grant the right to direct how and for what purpose an asset is used include rights that are limited to operating or maintaining the asset. Although rights such as those to operate or maintain an asset often are essential to the efficient use of an asset, they are not rights to direct how and for what purpose the asset is used and often are dependent on the decisions about how and for what purpose the asset is used. Such rights (that is, to operate or maintain the asset) can be held by the customer or the supplier. The supplier often holds those rights to protect its investment in the asset. However, rights to operate an asset may grant the customer the right to direct the use of the asset if the relevant decisions about how and for what purpose the asset is used are predetermined (see paragraph 842-10-15-20(b)(1)).
","snippet":"Examples of decision-making rights that do not grant the right to direct how and for what purpose an asset is used include rights that are limited to operating or maintaining the asset. Although rights such as those to o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ed2c7d32efffc65da9af5496f5232a43f2083996d92c9bd04004a634d69cc749","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-27","para":"15-27","html":"
See Examples 1 through 10 (paragraphs
842-10-55-41 through 55-130
) for illustrations of the requirements for identifying a lease.
","snippet":"See Examples 1 through 10 (paragraphs 842-10-55-41 through 55-130) for illustrations of the requirements for identifying a lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf4da023c20b6c5930798b95cffeda808944e5a4d0ff8f070d0b35f9c2058a87","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dceaf4d43699ff25f3807f5da154910b867950c2591ad61db27ee019a5c98300","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"block":null,"heading":"Separating Components of a Contract","paragraphs":[{"citation":"842-10-15-28","para":"15-28","html":"
After determining that a contract contains a lease in accordance with paragraphs
842-10-15-2 through 15-27
, an entity shall identify the separate lease components within the contract. An entity shall consider the right to use an underlying asset to be a separate lease component (that is, separate from any other lease components of the contract) if both of the following criteria are met:
  1. a
    The lessee can benefit from the right of use either on its own or together with other resources that are readily available to the lessee. Readily available resources are goods or services that are sold or leased separately (by the lessor or other suppliers) or resources that the lessee already has obtained (from the lessor or from other transactions or events).
  2. b
    The right of use is neither highly dependent on nor highly interrelated with the other right(s) to use underlying assets in the contract. A lessee's right to use an underlying asset is highly dependent on or highly interrelated with another right to use an underlying asset if each right of use significantly affects the other.
","snippet":"After determining that a contract contains a lease in accordance with paragraphs 842-10-15-2 through 15-27, an entity shall identify the separate lease components within the contract. An entity shall consider the right t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:39bf3fee52e1bf76947c6b10be6243f7be8d6b847ff14806d9c87ad2b1a922b7","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-29","para":"15-29","html":"
The guidance in paragraph 842-10-15-28 notwithstanding, to classify and account for a lease of land and other assets, an entity shall account for the right to use land as a separate lease component unless the accounting effect of doing so would be insignificant (for example, separating the land element would have no effect on lease classification of any lease component or the amount recognized for the land lease component would be insignificant).
","snippet":"The guidance in paragraph 842-10-15-28 notwithstanding, to classify and account for a lease of land and other assets, an entity shall account for the right to use land as a separate lease component unless the accounting …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbaa7f7f0e0abf9df1f44fbac078469279c140d6615c18774dfe73904db29db3","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-30","para":"15-30","html":"
The consideration in the contract shall be allocated to each separate lease component and nonlease component of the contract (see paragraphs
842-10-15-33 through 15-37
for lessee allocation guidance and paragraphs 842-10-15-38 through 15-42C for lessor allocation guidance). Components of a contract include only those items or activities that transfer a good or service to the lessee. Consequently, the following are not components of a contract and do not receive an allocation of the consideration in the contract:
  1. a
    Administrative tasks to set up a contract or initiate the lease that do not transfer a good or service to the lessee
  2. b
    Reimbursement or payment of the lessor's costs. For example, a lessor may incur various costs in its role as a lessor or as owner of the underlying asset. A requirement for the lessee to pay those costs, whether directly to a third party or as a reimbursement to the lessor, does not transfer a good or service to the lessee separate from the right to use the underlying asset.
","snippet":"The consideration in the contract shall be allocated to each separate lease component and nonlease component of the contract (see paragraphs 842-10-15-33 through 15-37 for lessee allocation guidance and paragraphs 842-10…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ad9cc1ae311eb740fa7abbe805e1cd6b2344baea15fdfd5ebc4889556752d226","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-31","para":"15-31","html":"
An entity shall account for each separate lease component separately from the nonlease components of the contract (that is, unless a lessee makes the accounting policy election described in paragraph 842-10-15-37or unless a lessor makes the accounting policy election in accordance with paragraph 842-10-15-42A). Nonlease components are not within the scope of this Topic and shall be accounted for in accordance with other Topics.
","snippet":"An entity shall account for each separate lease component separately from the nonlease components of the contract (that is, unless a lessee makes the accounting policy election described in paragraph 842-10-15-37or unles…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35af5c79c457d1b861d69f8d8d2110ced059be73ea78e86db034d3d87293571f","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-32","para":"15-32","html":"
See Examples 11 through 14 (paragraphs
842-10-55-131 through 55-158
) for illustrations of the requirements for allocating consideration to components of a contract.
","snippet":"See Examples 11 through 14 (paragraphs 842-10-55-131 through 55-158) for illustrations of the requirements for allocating consideration to components of a contract.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0978cc157b67de2e0b8a9cfd80e5281d46b0849f4d42a165eaf73272357f67fb","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-33","para":"15-33","html":"
A lessee shall allocate (that is, unless the lessee makes the accounting policy election described in paragraph 842-10-15-37) the consideration in the contract to the separate lease components determined in accordance with paragraphs
842-10-15-28 through 15-31
and the nonlease components as follows:
  1. a
    The lessee shall determine the relative standalone price of the separate lease components and the nonlease components on the basis of their observable standalone prices. If observable standalone prices are not readily available, the lessee shall estimate the standalone prices, maximizing the use of observable information. A residual estimation approach may be appropriate if the standalone price for a component is highly variable or uncertain.
  2. b
    The lessee shall allocate the consideration in the contract on a relative standalone price basis to the separate lease components and the nonlease components of the contract.
Initial direct costs should be allocated to the separate lease components on the same basis as the lease payments.
","snippet":"A lessee shall allocate (that is, unless the lessee makes the accounting policy election described in paragraph 842-10-15-37) the consideration in the contract to the separate lease components determined in accordance wi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62f01bdb2c97632468bcf4889d96793924c34c3b4a483cdaf97bfe1655c66fc5","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-34","para":"15-34","html":"
A price is observable if it is the price that either the lessor or similar suppliers sell similar lease or nonlease components on a standalone basis.
","snippet":"A price is observable if it is the price that either the lessor or similar suppliers sell similar lease or nonlease components on a standalone basis.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e98b4c39ba824c081f891360c3f7d30743fdea570af6fe10ccb5b541eef522a","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-35","para":"15-35","html":"
The consideration in the contract for a lessee includes all of the payments described in paragraph 842-10-30-5, as well as all of the following payments that will be made during the lease term:
  1. a
    Any fixed payments (for example, monthly service charges) or in substance fixed payments, less any incentives paid or payable to the lessee, other than those included in paragraph 842-10-30-5
  2. b
    Any other variable payments that depend on an index or a rate, initially measured using the index or rate at the commencement date.
","snippet":"The consideration in the contract for a lessee includes all of the payments described in paragraph 842-10-30-5, as well as all of the following payments that will be made during the lease term:\n(a) Any fixed payments (fo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:82322cf3ad7a6655135729802da74f4599a68f05bb2b0ee928776911f415a08c","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-36","para":"15-36","html":"
A lessee shall remeasure and reallocate the consideration in the contract upon either of the following:
  1. a
    A remeasurement of the lease liability (for example, a remeasurement resulting from a change in the lease term or a change in the assessment of whether a lessee is or is not reasonably certain to exercise an option to purchase the underlying asset) (see paragraph 842-20-35-4)
  2. b
    The effective date of a contract modification that is not accounted for as a separate contract (see paragraph 842-10-25-8).
","snippet":"A lessee shall remeasure and reallocate the consideration in the contract upon either of the following:\n(a) A remeasurement of the lease liability (for example, a remeasurement resulting from a change in the lease term o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5ed69b6824c98b12ca0a95c99be40e73f5fa48746c9c52653e8f0b199404865","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-37","para":"15-37","html":"
As a practical expedient, a lessee may, as an accounting policy election by class of underlying asset, choose not to separate nonlease components from lease components and instead to account for each separate lease component and the nonlease components associated with that lease component as a single lease component.
","snippet":"As a practical expedient, a lessee may, as an accounting policy election by class of underlying asset, choose not to separate nonlease components from lease components and instead to account for each separate lease compo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9e563f92e43a1d27c37ecca9561d05a736765bef7fb6febdac1fd938da7e2f1a","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-38","para":"15-38","html":"
A lessor shall allocate (unless the lessor makes the accounting policy election in accordance with paragraph 842-10-15-42A) the consideration in the contract to the separate lease components and the nonlease components using the requirements in paragraphs
606-10-32-28 through 32-41
. A lessor also shall allocate (unless the lessor makes the accounting policy election in accordance with paragraph 842-10-15-42A) any capitalized costs (for example, initial direct costs or contract costs capitalized in accordance with Subtopic 340-40 on other assets and deferred costs—contracts with customers) to the separate lease components or nonlease components to which those costs relate.
","snippet":"A lessor shall allocate (unless the lessor makes the accounting policy election in accordance with paragraph 842-10-15-42A) the consideration in the contract to the separate lease components and the nonlease components u…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76c11d636cf7b8bf7899277415cdd19fa9f8d8a3604d758fa1790ad7af33c09f","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-39","para":"15-39","html":"
The consideration in the contract for a lessor includes all of the amounts described in paragraph 842-10-15-35 and any other variable payment amounts that would be included in the transaction price in accordance with the guidance on variable consideration in Topic 606 on revenue from contracts with customers that specifically relates to either of the following:
  1. a
    The lessor's efforts to transfer one or more goods or services that are not leases
  2. b
    An outcome from transferring one or more goods or services that are not leases.
Any variable payment amounts accounted for as consideration in the contract shall be allocated entirely to the nonlease component(s) to which the variable payment specifically relates if doing so would be consistent with the transaction price allocation objective in paragraph 606-10-32-28.
","snippet":"The consideration in the contract for a lessor includes all of the amounts described in paragraph 842-10-15-35 and any other variable payment amounts that would be included in the transaction price in accordance with the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c300df4b4a8a2977e7bdd2a98d6fe77d3142e1383677206a54b77d98b169cf9","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-39A","para":"15-39A","html":"
A lessor may make an accounting policy election to exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific lease revenue-producing transaction and collected by the lessor from a lessee (for example, sales, use, value added, and some excise taxes). Taxes assessed on a lessor's total gross receipts or on the lessor as owner of the underlying asset shall be excluded from the scope of this election. A lessor that makes this election shall exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all taxes within the scope of the election and shall comply with the disclosure requirements in paragraph 842-30-50-14.
","snippet":"A lessor may make an accounting policy election to exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all taxes assessed by a governmental authorit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4076b2d5bf934259b3f2027559d228ebc7d3eafb2031474c4554fd3f7d9022c2","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-40","para":"15-40","html":"
If the terms of a variable payment amount other than those in paragraph 842-10-15-35 relate to a lease component, even partially, the lessor shall not recognize those payments before the changes in facts and circumstances on which the variable payment is based occur (for example, when the lessee's sales on which the amount of the variable payment depends occur). When the changes in facts and circumstances on which the variable payment is based occur, the lessor shall allocate those payments to the lease and nonlease components of the contract. The allocation shall be on the same basis as the initial allocation of the consideration in the contract or the most recent modification not accounted for as a separate contract unless the variable payment meets the criteria in paragraph 606-10-32-40 to be allocated only to the lease component(s). Variable payment amounts allocated to the lease component(s) shall be recognized as income in profit or loss in accordance with this Topic, while variable payment amounts allocated to nonlease component(s) shall be recognized in accordance with other Topics (for example, Topic 606 on revenue from contracts with customers).
","snippet":"If the terms of a variable payment amount other than those in paragraph 842-10-15-35 relate to a lease component, even partially, the lessor shall not recognize those payments before the changes in facts and circumstance…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac859163da9f1d59f5778639555be7c025a4926727537aa27276d357a235990f","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-40A","para":"15-40A","html":"
The guidance in paragraph 842-10-15-40 notwithstanding, a lessor shall exclude from variable payments lessor costs paid by a lessee directly to a third party. However, costs excluded from the consideration in the contract that are paid by a lessor directly to a third party and are reimbursed by a lessee are considered lessor costs that shall be accounted for by the lessor as variable payments (this requirement does not preclude a lessor from making the accounting policy election in paragraph 842-10-15-39A).
","snippet":"The guidance in paragraph 842-10-15-40 notwithstanding, a lessor shall exclude from variable payments lessor costs paid by a lessee directly to a third party. However, costs excluded from the consideration in the contrac…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:88b30a21662845e5aa7e011823d83429118a86c77659e68a0ecdce5daa5af31c","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-41","para":"15-41","html":"
A lessor shall remeasure and reallocate the remaining consideration in the contract when there is a contract modification that is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.
","snippet":"A lessor shall remeasure and reallocate the remaining consideration in the contract when there is a contract modification that is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c2dd440b893411a5097aa2fa9ad69d2b8484b2589b48e9cff0792f37c8c520d8","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-42","para":"15-42","html":"
If the consideration in the contract changes, a lessor shall allocate those changes in accordance with the requirements in paragraphs
606-10-32-42 through 32-45
.
","snippet":"If the consideration in the contract changes, a lessor shall allocate those changes in accordance with the requirements in paragraphs 606-10-32-42 through 32-45.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:766281c4cbe4c874b50e657c2631553aa22f966f0b4228df3aff905a96829f15","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-42A","para":"15-42A","html":"
As a practical expedient, a lessor may, as an accounting policy election, by class of underlying asset, choose to not separate nonlease components from lease components and, instead, to account for each separate lease component and the nonlease components associated with that lease component as a single component if the nonlease components otherwise would be accounted for under Topic 606 on revenue from contracts with customers and both of the following are met:
  1. a
    The timing and pattern of transfer for the lease component and nonlease components associated with that lease component are the same.
  2. b
    The lease component, if accounted for separately, would be classified as an operating lease in accordance with paragraphs 842-10-25-2 through 25-3A.
","snippet":"As a practical expedient, a lessor may, as an accounting policy election, by class of underlying asset, choose to not separate nonlease components from lease components and, instead, to account for each separate lease co…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e539b07edcade74ff2ab2150e25a8c3735ae941701635c90bd9f1cd84aa92d1c","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-42B","para":"15-42B","html":"
A lessor that elects the practical expedient in paragraph 842-10-15-42A shall account for the combined component:
  1. a
    As a single performance obligation entirely in accordance with Topic 606 if the nonlease component or components are the predominant component(s) of the combined component. In applying Topic 606, the entity shall do both of the following:
    1. 1
      Use the same measure of progress as used for applying paragraph 842-10-15-42A(a)
    2. 2
      Account for all variable payments related to any good or service, including the lease, that is part of the combined component in accordance with the guidance on variable consideration in Topic 606.
  2. b
    Otherwise, as an operating lease entirely in accordance with this Topic. In applying this Topic, the entity shall account for all variable payments related to any good or service that is part of the combined component as variable lease payments.
In determining whether a nonlease component or components are the predominant component(s) of a combined component, a lessor shall consider whether the lessee would be reasonably expected to ascribe more value to the nonlease component(s) than to the lease component.
","snippet":"A lessor that elects the practical expedient in paragraph 842-10-15-42A shall account for the combined component:\n(a) As a single performance obligation entirely in accordance with Topic 606 if the nonlease component or …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb334fe3ff0f96b5c51fb2c3802a93a43ced213d5159cafab7f47effe5c9677d","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"citation":"842-10-15-42C","para":"15-42C","html":"
A lessor that elects the practical expedient in paragraph 842-10-15-42A shall combine all nonlease components that qualify for the practical expedient with the associated lease component and shall account for the combined component in accordance with paragraph 842-10-15-42B. A lessor shall separately account for nonlease components that do not qualify for the practical expedient. Accordingly, a lessor shall apply paragraphs
842-10-15-38 through 15-42
to account for nonlease components that do not qualify for the practical expedient.
","snippet":"A lessor that elects the practical expedient in paragraph 842-10-15-42A shall combine all nonlease components that qualify for the practical expedient with the associated lease component and shall account for the combine…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75f5a81d9ddebad19fd6255275a6ec317331f2d14a7924257541e08f4f144b77","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f6460907a0544af8f4ce1e29d40b6fd5babbe680463ff7564507ec665b0c6103","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"block":null,"heading":"Other Considerations","paragraphs":[{"citation":"842-10-15-43","para":"15-43","html":"
Paragraph 815-10-15-79 explains that leases that are within the scope of this Topic are not derivative instruments subject to Subtopic 815-10 on derivatives and hedging although a derivative instrument embedded in a lease may be subject to the requirements of Section 815-15-25. Paragraph 815-10-15-80 explains that residual value guarantees that are subject to the guidance in this Topic are not subject to the guidance in Subtopic 815-10. Paragraph 815-10-15-81 requires that a third-party residual value guarantor consider the guidance in Subtopic 815-10 for all residual value guarantees that it provides to determine whether they are derivative instruments and whether they qualify for any of the scope exceptions in that Subtopic.
","snippet":"Paragraph 815-10-15-79 explains that leases that are within the scope of this Topic are not derivative instruments subject to Subtopic 815-10 on derivatives and hedging although a derivative instrument embedded in a leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:846e2c97f547f4f4de3a3933fc993c9a40d1f363c884378e5a6827d2548a530c","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:543f5190dca34937fdbde9b6b6814bc6142b2c118a4a0422bf2560c3a0660487","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:97629ca1bff3a98ac3aa7ad8f6811d18ebc2c50ff7b36a77d70467b4ddaf7cc0","downloaded_from":"2026-09-10T01:55:52.887Z","last_downloaded_at":"2026-09-10T01:55:52.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147480009","source_sha256":"d1b1df7314587018415052cd8105a264acfeb9401e8399808b66596788336651"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Lease Classification","paragraphs":[{"citation":"842-10-25-1","para":"25-1","html":"
An entity shall classify each separate lease component at the commencement date. An entity shall not reassess the lease classification after the commencement date unless the contract is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8. In addition, a lessee also shall reassess the lease classification after the commencement date if there is a change in the lease term or the assessment of whether the lessee is reasonably certain to exercise an option to purchase the underlying asset. When an entity (that is, a lessee or lessor) is required to reassess lease classification, the entity shall reassess classification of the lease on the basis of the facts and circumstances (and the modified terms and conditions, if applicable) as of the date the reassessment is required (for example, on the basis of the fair value and the remaining economic life of the underlying asset as of the date there is a change in the lease term or in the assessment of a lessee option to purchase the underlying asset or as of the effective date of a modification not accounted for as a separate contract in accordance with paragraph 842-10-25-8).
","snippet":"An entity shall classify each separate lease component at the commencement date. An entity shall not reassess the lease classification after the commencement date unless the contract is modified and the modification is n…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ec314695ab3d9cff96e426dd840e004d3fb73d2210cb32079bb1e719fe06229f","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-2","para":"25-2","html":"
A lessee shall classify a lease as a finance lease and a lessor shall classify a lease as a sales-type lease when the lease meets any of the following criteria at lease commencement:
  1. a
    The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.
  2. b
    The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
  3. c
    The lease term is for the major part of the remaining economic life of the underlying asset. However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not be used for purposes of classifying the lease.
  4. d
    The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) equals or exceeds substantially all of the fair value of the underlying asset.
  5. e
    The underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
","snippet":"A lessee shall classify a lease as a finance lease and a lessor shall classify a lease as a sales-type lease when the lease meets any of the following criteria at lease commencement:\n(a) The lease transfers ownership of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:27547d3a98003f6e1370324bcc6f1cb3dfcc191dd45d3e52afc64d8952a765f9","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-3","para":"25-3","html":"
When none of the criteria in paragraph 842-10-25-2 are met:
  1. a
    A lessee shall classify the lease as an operating lease.
  2. b
    A lessor shall classify the lease as either a direct financing lease or an operating lease. A lessor shall classify the lease as an operating lease unless both of the following criteria are met, in which case the lessor shall classify the lease as a direct financing lease:
    1. 1
      The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments in accordance with paragraph 842-10-30-5(f) and/or any other third party unrelated to the lessor equals or exceeds substantially all of the fair value of the underlying asset.
    2. 2
      It is probable that the lessor will collect the lease payments plus any amount necessary to satisfy a residual value guarantee.
","snippet":"When none of the criteria in paragraph 842-10-25-2 are met:\n(a) A lessee shall classify the lease as an operating lease.\n(b) A lessor shall classify the lease as either a direct financing lease or an operating lease. A l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:68ea2847ce11a7ad0a9dc6bd9da6d8670ff4d8cc76eaddd18b29c4499e24d3e9","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-3A","para":"25-3A","html":"
Notwithstanding the requirements in paragraphs
842-10-25-2 through 25-3
, a lessor shall classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease at lease commencement if classifying the lease as a sales-type lease or a direct financing lease would result in the recognition of a selling loss.
","snippet":"Notwithstanding the requirements in paragraphs 842-10-25-2 through 25-3, a lessor shall classify a lease with variable lease payments that do not depend on an index or a rate as an operating lease at lease commencement i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:220f18921ae600510d03de087d56cffbec4a1126d51880b0644f37b0a0c12777","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-4","para":"25-4","html":"
A lessor shall assess the criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1) using the rate implicit in the lease. For purposes of assessing the criterion in paragraph 842-10-25-2(d), a lessor shall assume that no initial direct costs will be deferred if, at the commencement date, the fair value of the underlying asset is different from its carrying amount.
","snippet":"A lessor shall assess the criteria in paragraphs 842-10-25-2(d) and 842-10-25-3(b)(1) using the rate implicit in the lease. For purposes of assessing the criterion in paragraph 842-10-25-2(d), a lessor shall assume that …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e921e74507686e89401185f42adec77e29e6738a3d0a3c433e71e5a3fbb16f59","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-5","para":"25-5","html":"
If a single lease component contains the right to use more than one underlying asset (see paragraphs
842-10-15-28 through 15-29
), an entity shall consider the remaining economic life of the predominant asset in the lease component for purposes of applying the criterion in paragraph 842-10-25-2(c).
","snippet":"If a single lease component contains the right to use more than one underlying asset (see paragraphs 842-10-15-28 through 15-29), an entity shall consider the remaining economic life of the predominant asset in the lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e182e3a326d858058ce4b0cbb3d8e3a64518d42e4269f07d5a49a4c45e9dd0e2","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-6","para":"25-6","html":"
When classifying a sublease, an entity shall classify the sublease with reference to the underlying asset (for example, the item of property, plant, or equipment that is the subject of the lease) rather than with reference to the right-of-use asset.
","snippet":"When classifying a sublease, an entity shall classify the sublease with reference to the underlying asset (for example, the item of property, plant, or equipment that is the subject of the lease) rather than with referen…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d80dd71f1a49cc9be99d0210e57e18ad04196c7b59960aee65ef00ec8dab7b1","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-7","para":"25-7","html":"
See paragraphs
842-10-55-2 through 55-15
for implementation guidance on lease classification.
","snippet":"See paragraphs 842-10-55-2 through 55-15 for implementation guidance on lease classification.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:be6a23d7494b0aee180183876b3ab76ad33f3c2c33dec423f191f13beb08b772","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:730f8ba301f55090e64737dad29d54e7490f4d23b0b9ce7b94c237812ea0b329","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"block":null,"heading":"Lease Modifications","paragraphs":[{"citation":"842-10-25-8","para":"25-8","html":"
An entity shall account for a modification to a contract as a separate contract (that is, separate from the original contract) when both of the following conditions are present:
  1. a
    The modification grants the lessee an additional right of use not included in the original lease (for example, the right to use an additional asset).
  2. b
    The lease payments increase commensurate with the standalone price for the additional right of use, adjusted for the circumstances of the particular contract. For example, the standalone price for the lease of one floor of an office building in which the lessee already leases other floors in that building may be different from the standalone price of a similar floor in a different office building, because it was not necessary for a lessor to incur costs that it would have incurred for a new lessee.
","snippet":"An entity shall account for a modification to a contract as a separate contract (that is, separate from the original contract) when both of the following conditions are present:\n(a) The modification grants the lessee an …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:751b86a60ff17495f4d6afc3800c28fb6e5970d511f2885e3d3e2878c701054c","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-9","para":"25-9","html":"
If a lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the entity shall reassess the classification of the lease in accordance with paragraph 842-10-25-1 as of the effective date of the modification.
","snippet":"If a lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the entity shall reassess the classification of the lease in accordance with paragraph 84…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8997445c4c98931af47045deda83867e9358c212200fad2158e9dc19a7677d5f","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-10","para":"25-10","html":"
An entity shall account for initial direct costs, lease incentives, and any other payments made to or by the entity in connection with a modification to a lease in the same manner as those items would be accounted for in connection with a new lease.
","snippet":"An entity shall account for initial direct costs, lease incentives, and any other payments made to or by the entity in connection with a modification to a lease in the same manner as those items would be accounted for in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62192d766182299c08ee908f81f3af2b8bbee075f1c39e2d654a75cf06d214ba","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-11","para":"25-11","html":"
A lessee shall reallocate the remaining consideration in the contract and remeasure the lease liability using a discount rate for the lease determined at the effective date of the modification if a contract modification does any of the following:
  1. a
    Grants the lessee an additional right of use not included in the original contract (and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8)
  2. b
    Extends or reduces the term of an existing lease (for example, changes the lease term from five to eight years or vice versa), other than through the exercise of a contractual option to extend or terminate the lease (as described in paragraph 842-20-35-5)
  3. c
    Fully or partially terminates an existing lease (for example, reduces the assets subject to the lease)
  4. d
    Changes the consideration in the contract only.
","snippet":"A lessee shall reallocate the remaining consideration in the contract and remeasure the lease liability using a discount rate for the lease determined at the effective date of the modification if a contract modification …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b8438534fbce8a7665d49fee59445bf262488ca471c0592c215f5e4f4bec3b94","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-12","para":"25-12","html":"
In the case of (a), (b), or (d) in paragraph 842-10-25-11, the lessee shall recognize the amount of the remeasurement of the lease liability for the modified lease as an adjustment to the corresponding right-of-use asset.
","snippet":"In the case of (a), (b), or (d) in paragraph 842-10-25-11, the lessee shall recognize the amount of the remeasurement of the lease liability for the modified lease as an adjustment to the corresponding right-of-use asset…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb63556cc99ff1bc5bd4ce6c4c66a56d36876d24356066787d73fbc4bc38f190","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-13","para":"25-13","html":"
In the case of (c) in paragraph 842-10-25-11, the lessee shall decrease the carrying amount of the right-of-use asset on a basis proportionate to the full or partial termination of the existing lease. Any difference between the reduction in the lease liability and the proportionate reduction in the right-of-use asset shall be recognized as a gain or a loss at the effective date of the modification.
","snippet":"In the case of (c) in paragraph 842-10-25-11, the lessee shall decrease the carrying amount of the right-of-use asset on a basis proportionate to the full or partial termination of the existing lease. Any difference betw…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db459db3fccaecad4972197ee896183a5d9fe7a7adc67d08fce8b31ca9c3647e","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-14","para":"25-14","html":"
If a finance lease is modified and the modified lease is classified as an operating lease, any difference between the carrying amount of the right-of-use asset after recording the adjustment required by paragraph 842-10-25-12 or 842-10-25-13 and the carrying amount of the right-of-use asset that would result from applying the initial operating right-of-use asset measurement guidance in paragraph 842-20-30-5 to the modified lease shall be accounted for in the same manner as a rent prepayment or a lease incentive.
","snippet":"If a finance lease is modified and the modified lease is classified as an operating lease, any difference between the carrying amount of the right-of-use asset after recording the adjustment required by paragraph 842-10-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f0267563cab19ab66fea9c6bd11f5839d803f2425b255b891ede8a20f04bcf0d","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-15","para":"25-15","html":"
If an operating lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modification as if it were a termination of the existing lease and the creation of a new lease that commences on the effective date of the modification as follows:
  1. a
    If the modified lease is classified as an operating lease, the lessor shall consider any prepaid or accrued lease rentals relating to the original lease as a part of the lease payments for the modified lease.
  2. b
    If the modified lease is classified as a direct financing lease or a sales-type lease, the lessor shall derecognize any deferred rent liability or accrued rent asset and adjust the selling profit or selling loss accordingly.
","snippet":"If an operating lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modification as if it were a termination of th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9f96e2860bd2808df6573dc05cd647bccc20bae5665d520b36c0d6cb085f9d38","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-16","para":"25-16","html":"
If a direct financing lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modified lease as follows:
  1. a
    If the modified lease is classified as a direct financing lease, the lessor shall adjust the discount rate for the modified lease so that the initial net investment in the modified lease equals the carrying amount of the net investment in the original lease immediately before the effective date of the modification.
  2. b
    If the modified lease is classified as a sales-type lease, the lessor shall account for the modified lease in accordance with the guidance applicable to sales-type leases in Subtopic 842-30, with the commencement date of the modified lease being the effective date of the modification. In calculating the selling profit or selling loss on the lease, the fair value of the underlying asset is its fair value at the effective date of the modification and its carrying amount is the carrying amount of the net investment in the original lease immediately before the effective date of the modification.
  3. c
    If the modified lease is classified as an operating lease, the carrying amount of the underlying asset equals the net investment in the original lease immediately before the effective date of the modification.
","snippet":"If a direct financing lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modified lease as follows:\n(a) If the mo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:81b43b1b27a855bbaba821df9d2cd038b8f44d2b850fa5a0327dd5e2f8072bca","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-17","para":"25-17","html":"
If a sales-type lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modified lease as follows:
  1. a
    If the modified lease is classified as a sales-type or a direct financing lease, in the same manner as described in paragraph 842-10-25-16(a)
  2. b
    If the modified lease is classified as an operating lease, in the same manner as described in paragraph 842-10-25-16(c).
","snippet":"If a sales-type lease is modified and the modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8, the lessor shall account for the modified lease as follows:\n(a) If the modified…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:74552e3a43c91720eea4439507af6a8fca82302a68f78f359d4443ab563d867f","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"citation":"842-10-25-18","para":"25-18","html":"
See Examples 15 through 22 (paragraphs
842-10-55-159 through 55-209
) for illustrations of the requirements on lease modifications.
","snippet":"See Examples 15 through 22 (paragraphs 842-10-55-159 through 55-209) for illustrations of the requirements on lease modifications.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a63a10db389103aeb74acbe2ed9761f938de1cc59182917123ad83deae27dcec","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c6ec90b2fc8bacc63265c6eeadfb3044032d84ccc9f7250f20bdd11794d61d1","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"block":null,"heading":"Contract Combinations","paragraphs":[{"citation":"842-10-25-19","para":"25-19","html":"
An entity shall combine two or more contracts, at least one of which is or contains a lease, entered into at or near the same time with the same counterparty (or related parties) and consider the contracts as a single transaction if any of the following criteria are met:
  1. a
    The contracts are negotiated as a package with the same commercial objective(s).
  2. b
    The amount of consideration to be paid in one contract depends on the price or performance of the other contract.
  3. c
    The rights to use underlying assets conveyed in the contracts (or some of the rights of use conveyed in the contracts) are a single lease component in accordance with paragraph 842-10-15-28.
","snippet":"An entity shall combine two or more contracts, at least one of which is or contains a lease, entered into at or near the same time with the same counterparty (or related parties) and consider the contracts as a single tr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:299598620d08036baf39030610024be173256a0a79a3864ff6cbea40b14371eb","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bba61fddb63cc122b50999941a4c599cc8a8607ce38ef73cf607729c6c06ed3b","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:66884183a995c2a408cb2c7c2efd7589e654b2161de85c08b275c751e1a8861b","downloaded_from":"2026-09-10T01:55:57.299Z","last_downloaded_at":"2026-09-10T01:55:57.299Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479948","source_sha256":"4b7dd318665dd7d568c58c75bc61be9c2d828af9ecedbce35991203720870867"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Lease Term and Purchase Options","paragraphs":[{"citation":"842-10-30-1","para":"30-1","html":"
An entity shall determine the lease term as the noncancellable period of the lease, together with all of the following:
  1. a
    Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option
  2. b
    Periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option
  3. c
    Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the lessor.
","snippet":"An entity shall determine the lease term as the noncancellable period of the lease, together with all of the following:\n(a) Periods covered by an option to extend the lease if the lessee is reasonably certain to exercise…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d4b7920dacb3715df9256ed4fbc0e372c6441aec6b7b1986b1df44462cb80ff9","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-2","para":"30-2","html":"
At the commencement date, an entity shall include the periods described in paragraph 842-10-30-1 in the lease term having considered all relevant factors that create an economic incentive for the lessee (that is, contract-based, asset-based, entity-based, and market-based factors). Those factors shall be considered together, and the existence of any one factor does not necessarily signify that a lessee is reasonably certain to exercise or not to exercise an option.
","snippet":"At the commencement date, an entity shall include the periods described in paragraph 842-10-30-1 in the lease term having considered all relevant factors that create an economic incentive for the lessee (that is, contrac…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:508ac4681a173765c930589e4ef60feddd6ab89f9621ee764eb623ad7cc2b311","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-3","para":"30-3","html":"
At the commencement date, an entity shall assess an option to purchase the underlying asset on the same basis as an option to extend or not to terminate a lease, as described in paragraph 842-10-30-2.
","snippet":"At the commencement date, an entity shall assess an option to purchase the underlying asset on the same basis as an option to extend or not to terminate a lease, as described in paragraph 842-10-30-2.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92db1618bfd0d92c497238ebb28640bde08b1507fa56191efe84616460666c58","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-4","para":"30-4","html":"
See paragraphs
842-10-55-19 through 55-21
for implementation guidance on commencement date and paragraphs
842-10-55-23 through 55-27
for implementation guidance on lease term and purchase options. See Examples 23 through 24 (paragraphs
842-10-55-210 through 55-224
) for illustrations of the requirements on purchase options.
","snippet":"See paragraphs 842-10-55-19 through 55-21 for implementation guidance on commencement date and paragraphs 842-10-55-23 through 55-27 for implementation guidance on lease term and purchase options. See Examples 23 through…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:887b73ed30f2391c6eafc833d5fc50b25bb8e83da06d9847085bb6684957837f","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7fa121817b6e29be59c789cfd9e5946763c9fcb566ca9d02874f84cce24f18fe","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"block":null,"heading":"Initial Measurement of the Lease Payments","paragraphs":[{"citation":"842-10-30-5","para":"30-5","html":"
At the commencement date, the lease payments shall consist of the following payments relating to the use of the underlying asset during the lease term:
  1. a
    Fixed payments, including in substance fixed payments, less any lease incentives paid or payable to the lessee (see paragraphs
    842-10-55-30 through 55-31
    ).
  2. b
    Variable lease payments that depend on an index or a rate (such as the Consumer Price Index or a market interest rate), initially measured using the index or rate at the commencement date.
  3. c
    The exercise price of an option to purchase the underlying asset if the lessee is reasonably certain to exercise that option (assessed considering the factors in paragraph 842-10-55-26).
  4. d
    Payments for penalties for terminating the lease if the lease term (as determined in accordance with paragraph 842-10-30-1) reflects the lessee exercising an option to terminate the lease.
  5. e
    Fees paid by the lessee to the owners of a special-purpose entity for structuring the transaction. However, such fees shall not be included in the fair value of the underlying asset for purposes of applying paragraph 842-10-25-2(d).
  6. f
    For a lessee only, amounts probable of being owed by the lessee under residual value guarantees (see paragraphs
    842-10-55-34 through 55-36
    ).
","snippet":"At the commencement date, the lease payments shall consist of the following payments relating to the use of the underlying asset during the lease term:\n(a) Fixed payments, including in substance fixed payments, less any …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:99e586d9efdb374c8524018bb78021aa881122a5da9b9e0f4c5bcbd55d63414e","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-6","para":"30-6","html":"
Lease payments do not include any of the following:
  1. a
    Variable lease payments other than those in paragraph 842-10-30-5(b)
  2. b
    Any guarantee by the lessee of the lessor's debt
  3. c
    Amounts allocated to nonlease components in accordance with paragraphs
    842-10-15-33 through 15-42
  4. d
    Leasehold improvements recognized by a lessee and accounted for in accordance with paragraph 842-20-35-12A.
","snippet":"Lease payments do not include any of the following:\n(a) Variable lease payments other than those in paragraph 842-10-30-5(b)\n(b) Any guarantee by the lessee of the lessor's debt\n(c) Amounts allocated to nonlease componen…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b09e0f61d7d94ecc4c90b683623daa37aa90fa5ba731aabf2a1922ba329869fd","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-7","para":"30-7","html":"
Paragraph 410-20-15-3(e) addresses the scope application of Subtopic 410-20 on asset retirement obligations to obligations of a lessee in connection with a lease (see paragraph 842-10-55-37).
","snippet":"Paragraph 410-20-15-3(e) addresses the scope application of Subtopic 410-20 on asset retirement obligations to obligations of a lessee in connection with a lease (see paragraph 842-10-55-37).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b6dc7b3ffd16098b7e139b7d1e7eaca5a79ed4e6fe3c6f888c7d047f24ff90f","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-8","para":"30-8","html":"
See Example 25 (paragraphs
842-10-55-225 through 55-234
) for an illustration of the requirements on lessee accounting for variable lease payments and Example 26 (paragraphs
842-10-55-235 through 55-238
) for an illustration of the requirements on termination penalties.
","snippet":"See Example 25 (paragraphs 842-10-55-225 through 55-234) for an illustration of the requirements on lessee accounting for variable lease payments and Example 26 (paragraphs 842-10-55-235 through 55-238) for an illustrati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5cda56dd358957cbb457f85cdfa7238e13ff6cc035a73a0091ea11760228baec","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-9","para":"30-9","html":"
Initial direct costs for a lessee or a lessor may include, for example, either of the following:
  1. a
    Commissions
  2. b
    Payments made to an existing tenant to incentivize that tenant to terminate its lease.
","snippet":"Initial direct costs for a lessee or a lessor may include, for example, either of the following:\n(a) Commissions\n(b) Payments made to an existing tenant to incentivize that tenant to terminate its lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c6267df28df72221389d6b873e3353ecd97700541697e2d3022643901569b503","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"citation":"842-10-30-10","para":"30-10","html":"
Costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as fixed employee salaries, are not initial direct costs. The following items are examples of costs that are not initial direct costs:
  1. a
    General overheads, including, for example, depreciation, occupancy and equipment costs, unsuccessful origination efforts, and idle time
  2. b
    Costs related to activities performed by the lessor for advertising, soliciting potential lessees, servicing existing leases, or other ancillary activities
  3. c
    Costs related to activities that occur before the lease is obtained, such as costs of obtaining tax or legal advice, negotiating lease terms and conditions, or evaluating a prospective lessee's financial condition.
","snippet":"Costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained, such as fixed employee salaries, are not initial direct costs. The following items are examples of costs t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:952458d7a457cd599f4ab963a4a00bc1b9112b7857118ffcdd2f6d7be5ec3375","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6bee6a7e9385fcd9afcafa12f8494d8511a88d84a3198a61b9ac32013b161c18","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6de337244b8ed9206ddcc217f474fa8a3943ed78bf4fa10e37e79dd62f288921","downloaded_from":"2026-09-10T01:56:00.343Z","last_downloaded_at":"2026-09-10T01:56:00.343Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479924","source_sha256":"f114d25d5f8d09a53bf0f41c2bd4fc7b9ca58aada9488b2e1a496efeb1642223"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Lease Term and Purchase Options","paragraphs":[{"citation":"842-10-35-1","para":"35-1","html":"
A lessee shall reassess the lease term or a lessee option to purchase the underlying asset only if and at the point in time that any of the following occurs:
  1. a
    There is a significant event or a significant change in circumstances that is within the control of the lessee that directly affects whether the lessee is reasonably certain to exercise or not to exercise an option to extend or terminate the lease or to purchase the underlying asset.
  2. b
    There is an event that is written into the contract that obliges the lessee to exercise (or not to exercise) an option to extend or terminate the lease.
  3. c
    The lessee elects to exercise an option even though the entity had previously determined that the lessee was not reasonably certain to do so.
  4. d
    The lessee elects not to exercise an option even though the entity had previously determined that the lessee was reasonably certain to do so.
","snippet":"A lessee shall reassess the lease term or a lessee option to purchase the underlying asset only if and at the point in time that any of the following occurs:\n(a) There is a significant event or a significant change in ci…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51bb295b7780fa3ae0743a8b22d230d5700d9558efbcee9374a343ec54570b74","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"citation":"842-10-35-2","para":"35-2","html":"
See paragraphs
842-10-55-28 through 55-29
for implementation guidance on reassessing the lease term and lessee options to purchase the underlying asset.
","snippet":"See paragraphs 842-10-55-28 through 55-29 for implementation guidance on reassessing the lease term and lessee options to purchase the underlying asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:18a1135ee46a0878d53134328e61d22fb147e544d38ca35330f3bc1def2fd3f7","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"citation":"842-10-35-3","para":"35-3","html":"
A lessor shall not reassess the lease term or a lessee option to purchase the underlying asset unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8. When a lessee exercises an option to extend the lease or purchase the underlying asset that the lessor previously determined the lessee was not reasonably certain to exercise or exercises an option to terminate the lease that the lessor previously determined the lessee was reasonably certain not to exercise, the lessor shall account for the exercise of that option in the same manner as a lease modification.
","snippet":"A lessor shall not reassess the lease term or a lessee option to purchase the underlying asset unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 8…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8b7ca2fb3773ff48ec43cb988bb9ac1fc449cb37512aa0d6054a3b9bc831163","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8091d0c81b857fb3d8b1445d686b791da302561cd4b8d54c8dc2fa8093f69157","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"block":null,"heading":"Subsequent Measurement of the Lease Payments","paragraphs":[{"citation":"842-10-35-4","para":"35-4","html":"
A lessee shall remeasure the lease payments if any of the following occur:
  1. a
    The lease is modified, and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.
  2. b
    A contingency upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based is resolved such that those payments now meet the definition of lease payments. For example, an event occurs that results in variable lease payments that were linked to the performance or use of the underlying asset becoming fixed payments for the remainder of the lease term. However, a change in a reference index or a rate upon which some or all of the variable lease payments in the contract are based does not constitute the resolution of a contingency subject to (b) (see paragraph 842-10-35-5 for guidance on the remeasurement of variable lease payments that depend on an index or a rate).
  3. c
    There is a change in any of the following:
    1. 1
      The lease term, as described in paragraph 842-10-35-1. A lessee shall determine the revised lease payments on the basis of the revised lease term.
    2. 2
      The assessment of whether the lessee is reasonably certain to exercise or not to exercise an option to purchase the underlying asset, as described in paragraph 842-10-35-1. A lessee shall determine the revised lease payments to reflect the change in the assessment of the purchase option.
    3. 3
      Amounts probable of being owed by the lessee under residual value guarantees. A lessee shall determine the revised lease payments to reflect the change in amounts probable of being owed by the lessee under residual value guarantees.
","snippet":"A lessee shall remeasure the lease payments if any of the following occur:\n(a) The lease is modified, and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.\n(b) A cont…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2e5f9be09a3d4b25a3da897415e5f535e3bee5bd75bb92bd34c0a8ff324106d","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"citation":"842-10-35-5","para":"35-5","html":"
When one or more of the events described in paragraph 842-10-35-4(a) or (c) occur or when a contingency unrelated to a change in a reference index or rate under paragraph 842-10-35-4(b) is resolved, variable lease payments that depend on an index or a rate shall be remeasured using the index or rate as of the date the remeasurement is required.
","snippet":"When one or more of the events described in paragraph 842-10-35-4(a) or (c) occur or when a contingency unrelated to a change in a reference index or rate under paragraph 842-10-35-4(b) is resolved, variable lease paymen…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:670a6c96d6ad696431b1bdcc55916f43339448b667437e1dc099b662f12ee807","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"citation":"842-10-35-6","para":"35-6","html":"
A lessor shall not remeasure the lease payments unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.
","snippet":"A lessor shall not remeasure the lease payments unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4bad606ff9e67204542bab2dc67b90a8ccae02c1d1bded4b9b392ab274bf9fe","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4cf0f352ce5adf23ab2dd9aa0fe5ed31761a37b8f36aa3b70fe068cdce67284a","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fad716b912b1c18aa75b1eaec537f55466c103b4162f0086fb3a716b6d327d73","downloaded_from":"2026-09-10T01:56:03.256Z","last_downloaded_at":"2026-09-10T01:56:03.256Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479894","source_sha256":"17ac3395b28f6f31f9154da84a3a4a498d3aa79eb6a1d832b50d974c6316c903"}},{"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"}},{"number":"65","label":"65 Transition and Open Effective Date Information","anchor":"65-transition-and-open-effective-date-information","is_sec":false,"groups":[{"block":null,"heading":"Transition Related to Accounting Standards Updates No. 2016-02, Leases (Topic 842), No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, No. 2018-10, Codification Improvements to Topic 842, Leases, No. 2018-11, Leases (Topic 842): Targeted Improvements, No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors, No. 2019-01, Leases (Topic 842): Codification Improvements, No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), Leases (Topic 842): Effective Dates, No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, No. 2021-09, Leases (Topic 842): Discount Rate for Lessees That Are Not Public Business Entities, and No. 2023-01, Leases (Topic 842): Common Control Arrangements","paragraphs":[{"citation":"842-10-65-1","para":"65-1","html":"
The following represents the transition and effective date information related to Accounting Standards Updates No. 2016-02, Leases (Topic 842), No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, No. 2018-10, Codification Improvements to Topic 842, Leases,No. 2018-11, Leases (Topic 842): Targeted Improvements, No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors, No. 2019-01, Leases (Topic 842): Codification Improvements, No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities, No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments, No. 2021-09, Leases (Topic 842): Discount Rate for Lessees That Are Not Public Business Entities, and No. 2023-01, Leases (Topic 842): Common Control Arrangements: [Note: See paragraph 842-10-S65-1 for an SEC Staff Announcement on transition related to Update 2016-02.]
","snippet":"The following represents the transition and effective date information related to Accounting Standards Updates No. 2016-02, Leases (Topic 842), No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Trans…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51cb62453278b652d226f20b7771e93ba52c63614a37404da18ffafc8a5ee3c2","downloaded_from":"2026-09-10T01:56:14.090Z","last_downloaded_at":"2026-09-10T01:56:14.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479832","source_sha256":"4d3564b0bb34fb2cb06d95e1dee859773bd53d65e7e48eeb60972ed81c0cf9d8"}},{"citation":"842-10-65-2","para":"65-2","html":"
Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2018-11, Leases (Topic 842): Targeted Improvements.
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Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2018-20, Leases (Topic 842): Narrow-Scope Improvements for Lessors.
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Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Updates No. 2019-01, Leases (Topic 842): Codification Improvements, No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, and No. 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842): Effective Dates for Certain Entities.
","snippet":"Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Updates No. 2019-01, Leases (Topic 842): Codification Improvements, No. 2019-10, Financial Instruments—Credit Losse…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba675b417f7f86430b8e0d66eb9b29d8b8d93c7c5667327ff333af2ed23c795e","downloaded_from":"2026-09-10T01:56:14.090Z","last_downloaded_at":"2026-09-10T01:56:14.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479832","source_sha256":"4d3564b0bb34fb2cb06d95e1dee859773bd53d65e7e48eeb60972ed81c0cf9d8"}},{"citation":"842-10-65-5","para":"65-5","html":"
Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2021-05, Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments.
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Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2021-09, Leases (Topic 842): Discount Rate for Lessees That Are Not Public Business Entities.
","snippet":"Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2021-09, Leases (Topic 842): Discount Rate for Lessees That Are Not Public Business Entities.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:37a0918629eade7f58c0e14fd880d2961fab5598c870182d9a9201be103008d2","downloaded_from":"2026-09-10T01:56:14.090Z","last_downloaded_at":"2026-09-10T01:56:14.090Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479832","source_sha256":"4d3564b0bb34fb2cb06d95e1dee859773bd53d65e7e48eeb60972ed81c0cf9d8"}},{"citation":"842-10-65-7","para":"65-7","html":"
Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2023-01, Leases (Topic 842): Common Control Arrangements.
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Paragraph superseded on 06/30/2025 after the end of the transition period stated in Accounting Standards Update No. 2023-01, Leases (Topic 842): Common Control Arrangements.
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The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
842-10-S65-1AmendedAccounting Standards Update No. 2020-0202/06/2020
842-10-S65-1AddedAccounting Standards Update No. 2017-1309/29/2017
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\n842-10-S65-1 | Amended | Accounting Standards Update No. 2020-02 | 02/06/2020 |\n842-10-S…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:202ad656ef5c8f9e733c6003af37f3825b87a83ed5d52948a5ff5711955db58d","downloaded_from":"2026-09-10T01:56:18.552Z","last_downloaded_at":"2026-09-10T01:56:18.552Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483629","source_sha256":"f400ebd201afd3f27732bce96ca76d83d65458f61aa405bd1924f960bede9984"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1d818affd27a5c8e788d1d3bac363ca38690f52dc56746c61d7484b312e2fde5","downloaded_from":"2026-09-10T01:56:18.552Z","last_downloaded_at":"2026-09-10T01:56:18.552Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483629","source_sha256":"f400ebd201afd3f27732bce96ca76d83d65458f61aa405bd1924f960bede9984"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8f76a3187270d6ad5d698e3e719a8f2839073a688152dfe7ab1d38c87f391187","downloaded_from":"2026-09-10T01:56:18.552Z","last_downloaded_at":"2026-09-10T01:56:18.552Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483629","source_sha256":"f400ebd201afd3f27732bce96ca76d83d65458f61aa405bd1924f960bede9984"}},{"number":"S65","label":"SEC 65 Transition and Open Effective Date Information","anchor":"sec-65-transition-and-open-effective-date-information","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"842-10-S65-1","para":"S65-1","html":"
Note: At the December 2019 AICPA National Conference on Current SEC and PCAOB Developments, the SEC staff announced that it would not object to a public business entity that otherwise would not meet the definition of a public business entity except for a requirement to include or the inclusion of its financial statements or financial information in another entity's filing with the SEC adopting Topic 842, Leases, for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Those dates are consistent with the effective dates for Topic 842 as amended in Accounting Standards Update No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. The following is the text of SEC Staff Announcement: Transition Related to Accounting Standards Updates No. 2014-09 and 2016-02.
","snippet":"Note: At the December 2019 AICPA National Conference on Current SEC and PCAOB Developments, the SEC staff announced that it would not object to a public business entity that otherwise would not meet the definition of a p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6491abe976ba99f25e2b4613808c09856be627f0a0e44a981b22214348262213","downloaded_from":"2026-09-10T01:56:24.118Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483625","source_sha256":"17c2d7fc2207526c7b217ae5b422a69d1ad1bdcea99e834c8a2d5f6ea8af3499"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e219a151512f574153119bf2348d772ffd08569254c3b535b5379fb7b4b619ed","downloaded_from":"2026-09-10T01:56:24.118Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483625","source_sha256":"17c2d7fc2207526c7b217ae5b422a69d1ad1bdcea99e834c8a2d5f6ea8af3499"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aaf5cfcec601984fe4e5dddd55420bfddfe05f6e81cf298cec02c30f539bd962","downloaded_from":"2026-09-10T01:56:24.118Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483625","source_sha256":"17c2d7fc2207526c7b217ae5b422a69d1ad1bdcea99e834c8a2d5f6ea8af3499"}}],"enrichment":{"summary":"ASC 842-10 sets the scope and core mechanics common to all leases: how to decide whether a contract is or contains a lease, how to identify and separate lease and nonlease components and allocate consideration, how to classify the lease (finance/sales-type, direct financing, or operating), and how to determine lease term and lease payments. A contract contains a lease if it conveys the right to control the use of an identified item of property, plant, or equipment for a period of time in exchange for consideration — meaning the customer has both the right to obtain substantially all the economic benefits from use and the right to direct the use of that asset (842-10-15-3, 15-4). Classification is made once at the commencement date and is reassessed only on a modification not accounted for as a separate contract (or, for lessees, a change in lease term or purchase option assessment) (842-10-25-1).","key_points":["The Topic applies to all leases, including subleases, but excludes leases of intangible assets, mineral/oil/gas exploration rights, biological assets including timber, inventory, and assets under construction (842-10-15-1).","A contract is or contains a lease only if it conveys the right to control the use of an identified PP&E asset for a period of time for consideration; control requires both the right to obtain substantially all the economic benefits from use and the right to direct the use of the asset throughout the period of use (842-10-15-3; 15-4), and the assessment is revisited only if the contract's terms and conditions change (842-10-15-6).","An asset is not 'identified' if the supplier has a substantive substitution right — practical ability to substitute throughout the period of use plus economic benefit from substituting; if the customer cannot readily determine this, the right is presumed not substantive (842-10-15-10; 15-15). A physically distinct capacity portion is an identified asset; a non-physically-distinct portion is not unless it is substantially all of the capacity (842-10-15-16).","Separate lease components exist where the lessee can benefit from the right of use on its own or with readily available resources and the right of use is neither highly dependent on nor highly interrelated with other rights of use (842-10-15-28); land is generally separated (842-10-15-29), and administrative setup tasks and reimbursements of lessor costs are not components and receive no allocation (842-10-15-30).","Lessees allocate consideration on a relative standalone price basis (842-10-15-33) but may elect by class of underlying asset not to separate nonlease components (842-10-15-37); lessors allocate using Topic 606 (842-10-15-38) and may elect to combine nonlease components with an operating lease component when the timing and pattern of transfer are the same (842-10-15-42A through 15-42B).","A lessee classifies a lease as a finance lease and a lessor as a sales-type lease if any of the five criteria in 842-10-25-2 are met (ownership transfer, purchase option reasonably certain of exercise, major part of remaining economic life, PV of lease payments plus lessee residual value guarantee equals or exceeds substantially all of fair value, or specialized asset with no alternative use); otherwise a lessor has a direct financing lease only if the PV test (including third-party guarantees) is met and collection is probable, and an operating lease in all other cases (842-10-25-3). Reasonable benchmarks are 75% of economic life and 90% of fair value (842-10-55-2).","Lease term is the noncancellable period plus optional periods the lessee is reasonably certain to exercise or not to terminate, and periods whose exercise the lessor controls (842-10-30-1); lease payments include fixed and in-substance fixed payments net of incentives, index/rate-based variable payments measured at commencement, reasonably certain purchase option prices, termination penalties, and (lessee only) amounts probable of being owed under residual value guarantees (842-10-30-5), excluding other variable payments (842-10-30-6). A modification is a separate contract only if it adds a right of use priced at its standalone price (842-10-25-8)."],"categories":["Leases","Recognition","Initial measurement","Presentation"],"audience_level":"intermediate","student_note":"842-10 is the gateway subtopic: nearly every lease question starts with 'is there a lease?' and 'how is it classified?' Students commonly treat the old 90%/75% tests as bright lines — under 842 they are only 'one reasonable approach' (842-10-55-2) — and forget that lessors cannot reassess lease term or remeasure lease payments absent a modification (842-10-35-3; 35-6).","related_topics":["842-20","842-30","842-40","842-50","606","360"],"key_concepts":["identified asset","right to control the use","substantive substitution right","separate lease component","nonlease component allocation","lease classification criteria","lease term and renewal options","lease payments and residual value guarantees"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:57d7fc6e3847adb7efbf9f34fe9e564972f5ab72b536f9a89e39d7d5e452e20e","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.782,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d058de4df498a1011b791e92b0c8e5f00496583291e349f444fcc37e63762334","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"815-40","title":"Contracts in Entity's Own Equity","topic_title":"Derivatives and Hedging","score":0.7627,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9d843dc2b375cb2d213866262ef7922157ca484743b4fe5e9476de269a075c5","downloaded_from":"2026-09-10T01:38:46.766Z","last_downloaded_at":"2026-09-10T01:39:22.945Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","score":0.762,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a29021205ebdffba0ba1603665011a0e84e1da1a128690d0d071934538053e03","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","score":0.7536,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a571fd5303a38e2793a8985d8f358f21259b92aa3d9a1185153722c3b470b70","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-30","title":"Lessor","topic_title":"Leases","score":0.7496,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fdaad6b81a8fbb8238520b515e70f534d750e4ee92a47411a22caf605a1b0b93","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","score":0.7376,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c337bc3f67a263b01379af0b8b59d822a17f565f3d1dde925a45a0691e1ccbe6","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"840-980","title":"Regulated Operations","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:393a6e961fe37bfc696de4d6a11f6fc4ecb153d14fee2ee3b7d1359ba1a514bb","downloaded_from":"2026-09-10T01:55:18.640Z","last_downloaded_at":"2026-09-10T01:55:41.940Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-20","title":"Lessee","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5377341dd9f13f31207724ba7a25c6115744e489d82131002fdbe535c0995832","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0f96cb121a7cb40de72deda5ad9072fb8fb6f97b0e76f323c49c612bb376739b","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-20","topic":"842","title":"Lessee","area":"Broad Transactions","paragraphs":107,"summary":"ASC 842-20 governs how a lessee accounts for leases already classified as finance or operating leases under 842-10. At commencement the lessee recognizes a right-of-use asset and lease liability measured at the present value of unpaid lease payments (842-20-25-1; 30-1); thereafter finance leases produce separate amortization and interest (842-20-25-5), while operating leases produce a single straight-line lease cost (842-20-25-6). It also covers short-term lease policy elections, remeasurement, ROU asset impairment, leasehold improvements, subleases, terminations, and extensive presentation and disclosure requirements.","concepts":["right-of-use asset","lease liability","finance lease","operating lease","single lease cost","short-term lease election","incremental borrowing rate","remeasurement and impairment of rou asset"],"categories":["Leases","Initial measurement","Subsequent measurement","Disclosure"],"level":"intermediate","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAddedAccounting Standards Update No. 2016-0202/25/2016
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
AcquirerAddedAccounting Standards Update No. 2016-0202/25/2016
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAddedAccounting Standards Update No. 2016-0202/25/2016
Business CombinationAddedAccounting Standards Update No. 2016-0202/25/2016
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Direct Financing LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Direct Financing LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Discount Rate for the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Fair Value (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Finance LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Incremental Borrowing RateAddedAccounting Standards Update No. 2016-0202/25/2016
Initial Direct CostsAddedAccounting Standards Update No. 2016-0202/25/2016
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease LiabilityAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ModificationAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
Legal EntityAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Market ParticipantsAddedAccounting Standards Update No. 2016-0202/25/2016
Monetary LiabilityAddedAccounting Standards Update No. 2016-0202/25/2016
Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Operating LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Orderly TransactionAddedAccounting Standards Update No. 2016-0202/25/2016
Probable (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Rate Implicit in the LeaseAmendedAccounting Standards Update No. 2018-1007/18/2018
Rate Implicit in the LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Related PartiesAddedAccounting Standards Update No. 2016-0202/25/2016
Residual Value GuaranteeAddedAccounting Standards Update No. 2016-0202/25/2016
Right-of-Use AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Sales-Type LeaseAmendedAccounting Standards Update No. 2021-0507/19/2021
Sales-Type LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Short-Term LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
SubleaseAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Useful LifeAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
Variable Interest EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
842-20-05-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-15-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-25-1 through 25-8
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-30-1 through 30-6
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-30-3AmendedAccounting Standards Update No. 2021-0911/11/2021
842-20-35-1 through 35-15
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-35-12AmendedAccounting Standards Update No. 2023-0103/27/2023
842-20-35-12A through 35-12C
AddedAccounting Standards Update No. 2023-0103/27/2023
842-20-35-13AmendedAccounting Standards Update No. 2023-0508/23/2023
842-20-40-1 through 40-3
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-45-1 through 45-5
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-50-1AmendedAccounting Standards Update No. 2021-0911/11/2021
842-20-50-1 through 50-9
AddedAccounting Standards Update No. 2016-0202/25/2016
842-20-50-4AmendedAccounting Standards Update No. 2024-0311/04/2024
842-20-50-7AAddedAccounting Standards Update No. 2023-0103/27/2023
842-20-50-10AddedAccounting Standards Update No. 2021-0911/11/2021
842-20-55-1 through 55-53
AddedAccounting Standards Update No. 2016-0202/25/2016
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\nAcquiree | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nAcquirer | Amended | A…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:beeeb7720d9e5ac580406e52ce8fca0cccf9a11c9fe6851e740acbe846316e85","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:56:28.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479802","source_sha256":"0582b638896f0d5ef7674652c0f643274b8f221ca53e24a138d6fd42aa0d57d9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4247a2292348a1876b6122bfc3c13a65852f83c7e65708c74da9b8ded7645655","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:56:28.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479802","source_sha256":"0582b638896f0d5ef7674652c0f643274b8f221ca53e24a138d6fd42aa0d57d9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:53d4fd983f5289514c4368cb196a1044298cb2ed5f9e70e05874786ec6b348d1","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:56:28.044Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479802","source_sha256":"0582b638896f0d5ef7674652c0f643274b8f221ca53e24a138d6fd42aa0d57d9"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-05-1","para":"05-1","html":"
This Subtopic addresses accounting by lessees for leases that have been classified as finance leases or operating leases in accordance with the requirements in Subtopic 842-10. Lessees shall follow the requirements in this Subtopic as well as those in Subtopic 842-10.
","snippet":"This Subtopic addresses accounting by lessees for leases that have been classified as finance leases or operating leases in accordance with the requirements in Subtopic 842-10. Lessees shall follow the requirements in th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f1124f5a3f9c5cc9f005bc37ccd337031b8b0dc62df554db0bc2d9641dc9540","downloaded_from":"2026-09-10T01:56:30.278Z","last_downloaded_at":"2026-09-10T01:56:30.278Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479703","source_sha256":"5c58dcabcbd162837540184c9f469de547f356b00f580084df48ff9532c46dbc"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2029ca0af292c1ba117147928e648414db9026e047625fc45d550b7923750277","downloaded_from":"2026-09-10T01:56:30.278Z","last_downloaded_at":"2026-09-10T01:56:30.278Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479703","source_sha256":"5c58dcabcbd162837540184c9f469de547f356b00f580084df48ff9532c46dbc"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bba73173112883d57457239ffa231cb739c93111681c19ea4c14b26a3e8ca039","downloaded_from":"2026-09-10T01:56:30.278Z","last_downloaded_at":"2026-09-10T01:56:30.278Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479703","source_sha256":"5c58dcabcbd162837540184c9f469de547f356b00f580084df48ff9532c46dbc"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b1e0b5c7553c12222cb4f9484a0143ab5e3bf4c1eb80736d57bc412651ed6d56","downloaded_from":"2026-09-10T01:56:32.937Z","last_downloaded_at":"2026-09-10T01:56:32.937Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479588","source_sha256":"cae6c01981c60889e8b5bafc308d76fc73527c2237b41ae6f06b646f0d7c6c8e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4eed54546854057bf58ecf0ceceef0520f6246afa2d0b84946bc1c4e1b547386","downloaded_from":"2026-09-10T01:56:32.937Z","last_downloaded_at":"2026-09-10T01:56:32.937Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479588","source_sha256":"cae6c01981c60889e8b5bafc308d76fc73527c2237b41ae6f06b646f0d7c6c8e"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:41cd1fb96ce40f20dc570b784884fbbd3b39d78ab51c757fd93d2662fc95ec0e","downloaded_from":"2026-09-10T01:56:32.937Z","last_downloaded_at":"2026-09-10T01:56:32.937Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479588","source_sha256":"cae6c01981c60889e8b5bafc308d76fc73527c2237b41ae6f06b646f0d7c6c8e"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-25-1","para":"25-1","html":"
At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability.
","snippet":"At the commencement date, a lessee shall recognize a right-of-use asset and a lease liability.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ef3d7f440b1af531f868b9e8d2ebe9124cbdaa3d5414aa83746417c178198722","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c76990a4a5cb53c23b2c644cc0e55004be41247ef5a1f7d4203275609796d722","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Short-Term Leases","paragraphs":[{"citation":"842-20-25-2","para":"25-2","html":"
As an accounting policy, a lessee may elect not to apply the recognition requirements in this Subtopic to short-term leases. Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred (consistent with paragraphs
842-20-55-1 through 55-2
). The accounting policy election for short-term leases shall be made by class of underlying asset to which the right of use relates.
","snippet":"As an accounting policy, a lessee may elect not to apply the recognition requirements in this Subtopic to short-term leases. Instead, a lessee may recognize the lease payments in profit or loss on a straight-line basis o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9014aa9c1f9fa325b0d9d486c57aac8c6ec2f04666bc3d5531d8564d0fa5b757","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-3","para":"25-3","html":"
If the lease term or the assessment of a lessee option to purchase the underlying asset changes such that, after the change, the remaining lease term extends more than 12 months from the end of the previously determined lease term or the lessee is reasonably certain to exercise its option to purchase the underlying asset, the lease no longer meets the definition of a short-term lease and the lessee shall apply the remainder of the guidance in this Topic as if the date of the change in circumstances is the commencement date.
","snippet":"If the lease term or the assessment of a lessee option to purchase the underlying asset changes such that, after the change, the remaining lease term extends more than 12 months from the end of the previously determined …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b27e44885dd33d3b55f6e9e7a70b2a26a49709a33cbbb9573ad13d8b7a1f740c","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-4","para":"25-4","html":"
See Example 1 (paragraphs
842-20-55-13 through 55-16
) for an illustration of the requirements on short-term leases.
","snippet":"See Example 1 (paragraphs 842-20-55-13 through 55-16) for an illustration of the requirements on short-term leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93b38f2f3e8a884662a329007c1fae114679e00ef1cdb76a9ffa7e7eaad2cb95","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c94ed633fc19fd83b879f83922378bd79976d419b783bb72874d299496ae2245","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Finance Leases","paragraphs":[{"citation":"842-20-25-5","para":"25-5","html":"
After the commencement date, a lessee shall recognize in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:
  1. a
    Amortization of the right-of-use asset and interest on the lease liability
  2. b
    Variable lease payments not included in the lease liability in the period in which the obligation for those payments is incurred (see paragraphs
    842-20-55-1 through 55-2
    )
  3. c
    Any impairment of the right-of-use asset determined in accordance with paragraph 842-20-35-9.
","snippet":"After the commencement date, a lessee shall recognize in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:\n(a) Amortization of the right-of-use asset a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a7b260a0fb8a45dd261229a6cf0172fca0c1b198367cefa6fd464bca60ed1740","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0a9e6cda1ebe92ed459227533b5fb8f295fc758e7d5b74e58f10aea49f3602f2","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-20-25-6","para":"25-6","html":"
After the commencement date, a lessee shall recognize all of the following in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:
  1. a
    A single lease cost, calculated so that the remaining cost of the lease (as described in paragraph 842-20-25-8) is allocated over the remaining lease term on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the right to use the underlying asset (see paragraph 842-20-55-3), unless the right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, in which case the single lease cost is calculated in accordance with paragraph 842-20-25-7
  2. b
    Variable lease payments not included in the lease liability in the period in which the obligation for those payments is incurred (see paragraphs
    842-20-55-1 through 55-2
    )
  3. c
    Any impairment of the right-of-use asset determined in accordance with paragraph 842-20-35-9.
","snippet":"After the commencement date, a lessee shall recognize all of the following in profit or loss, unless the costs are included in the carrying amount of another asset in accordance with other Topics:\n(a) A single lease cost…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf52d49ee71aaa210cc3ad0500583574ff23bec1afb9fd534f537311dee14c39","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-7","para":"25-7","html":"
After a right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, the single lease cost described in paragraph 842-20-25-6(a) shall be calculated as the sum of the following:
  1. a
    Amortization of the remaining balance of the right-of-use asset after the impairment on a straight-line basis, unless another systematic basis is more representative of the pattern in which the lessee expects to consume the remaining economic benefits from its right to use the underlying asset
  2. b
    Accretion of the lease liability, determined for each remaining period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the liability.
","snippet":"After a right-of-use asset has been impaired in accordance with paragraph 842-20-35-9, the single lease cost described in paragraph 842-20-25-6(a) shall be calculated as the sum of the following:\n(a) Amortization of the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:44a011a9c30128e630f01173326dd8605fdaa08d1e4c40fe7a1cdf898531460e","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"citation":"842-20-25-8","para":"25-8","html":"
Throughout the lease term, the remaining cost of an operating lease for which the right-of-use asset has not been impaired consists of the following:
  1. a
    The total lease payments (including those paid and those not yet paid), reflecting any adjustment to that total amount resulting from either a remeasurement in accordance with paragraphs
    842-10-35-4 through 35-5
    or a lease modification; plus
  2. b
    The total initial direct costs attributable to the lease; minus
  3. c
    The periodic lease cost recognized in prior periods.
","snippet":"Throughout the lease term, the remaining cost of an operating lease for which the right-of-use asset has not been impaired consists of the following:\n(a) The total lease payments (including those paid and those not yet p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:140f84f80149153255ba53ff121900f3f4ce1d03a228fb7a567ac2b5e5c89e04","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90099ebc65d09dfc9a7e8ca3fdc59e708192b8a47127c334715fd7c63f96a028","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5499017552d3b6fbd32a146c420d3e2ed3ede345043089c88e5dc188fcb2125b","downloaded_from":"2026-09-10T01:56:38.192Z","last_downloaded_at":"2026-09-10T01:56:38.192Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479365","source_sha256":"034f99fc778f91d6f01ea7dbcfe5bd8b5b741e42473b822ebb2fff6baa7bb112"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-30-1","para":"30-1","html":"
At the commencement date, a lessee shall measure both of the following:
  1. a
    The lease liability at the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencement (as described in paragraphs
    842-20-30-2 through 30-4
    )
  2. b
    The right-of-use asset as described in paragraph 842-20-30-5.
","snippet":"At the commencement date, a lessee shall measure both of the following:\n(a) The lease liability at the present value of the lease payments not yet paid, discounted using the discount rate for the lease at lease commencem…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ccfc5b095bdccd18b0a404ab218c24d6c5c560220f36c2fb05abd156b84eed8","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:859c622077905dbea0137897c295f546c37910de878f476bace9b3a70007c29f","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"block":null,"heading":"Discount Rate for the Lease","paragraphs":[{"citation":"842-20-30-2","para":"30-2","html":"
The discount rate for the lease initially used to determine the present value of the lease payments for a lessee is calculated on the basis of information available at the commencement date.
","snippet":"The discount rate for the lease initially used to determine the present value of the lease payments for a lessee is calculated on the basis of information available at the commencement date.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:371afc67fb8e3a80a14fb8a007ca1bd322c57e94687e092ba93723a3750263e8","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"citation":"842-20-30-3","para":"30-3","html":"
A lessee should use the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, a lessee uses its incremental borrowing rate. A lessee that is not a public business entity is permitted to use a risk-free discount rate for the lease instead of its incremental borrowing rate, determined using a period comparable with that of the lease term, as an accounting policy election made by class of underlying asset.
","snippet":"A lessee should use the rate implicit in the lease whenever that rate is readily determinable. If the rate implicit in the lease is not readily determinable, a lessee uses its incremental borrowing rate. A lessee that is…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04597f7f9a74c367f14806b942dfca8f2e2917487fef35d0c23f0ee715cc2914","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"citation":"842-20-30-4","para":"30-4","html":"
See Example 2 (paragraphs
842-20-55-17 through 55-20
) for an illustration of the requirements on the discount rate.
","snippet":"See Example 2 (paragraphs 842-20-55-17 through 55-20) for an illustration of the requirements on the discount rate.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1c2c74a73cdd1cf408314e85448266dfd835c1772adb731a2e2caf61106d7ff8","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01e86f85b0985850daa1683d7a8d6fcc0c4514634c5caa21a493ea73083eabf2","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"block":null,"heading":"Initial Measurement of the Right-of-Use Asset","paragraphs":[{"citation":"842-20-30-5","para":"30-5","html":"
At the commencement date, the cost of the right-of-use asset shall consist of all of the following:
  1. a
    The amount of the initial measurement of the lease liability
  2. b
    Any lease payments made to the lessor at or before the commencement date, minus any lease incentives received
  3. c
    Any initial direct costs incurred by the lessee (as described in paragraphs
    842-10-30-9 through 30-10
    ).
","snippet":"At the commencement date, the cost of the right-of-use asset shall consist of all of the following:\n(a) The amount of the initial measurement of the lease liability\n(b) Any lease payments made to the lessor at or before …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:11a22e13e976a31187d5004b15fa80d6e5521746addfd0e4204bd87122e4c800","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"citation":"842-20-30-6","para":"30-6","html":"
See Example 3 (paragraphs
842-20-55-21 through 55-39
) for an illustration of the requirements on lessee measurement of the lease term.
","snippet":"See Example 3 (paragraphs 842-20-55-21 through 55-39) for an illustration of the requirements on lessee measurement of the lease term.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1d325ef6aada938309e3e5e883f9fdf6652e296aa819c095a3943be546b06ecf","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd0e98d1782f5951aacb23251420c9602e90b968f38e9b00f11687a77286f3af","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7f4378b2ab0b99e58c22a177fa101b942fa18bf3ad7953a7cd6878ca2c053871","downloaded_from":"2026-09-10T01:56:41.579Z","last_downloaded_at":"2026-09-10T01:56:41.579Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479269","source_sha256":"a264ab64b6c60bebcf94557ad0149a14f52134ad842f8563260ca79d829a5c01"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-35-1","para":"35-1","html":"
After the commencement date, for a finance lease, a lessee shall measure both of the following:
  1. a
    The lease liability by increasing the carrying amount to reflect interest on the lease liability and reducing the carrying amount to reflect the lease payments made during the period. The lessee shall determine the interest on the lease liability in each period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the liability, taking into consideration the reassessment requirements in paragraphs
    842-10-35-1 through 35-5
    .
  2. b
    The right-of-use asset at cost less any accumulated amortization and any accumulated impairment losses, taking into consideration the reassessment requirements in paragraphs
    842-10-35-1 through 35-5
    .
","snippet":"After the commencement date, for a finance lease, a lessee shall measure both of the following:\n(a) The lease liability by increasing the carrying amount to reflect interest on the lease liability and reducing the carryi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75859c2e81feb2c420183192de3a0be9a839c1947c8ac7f0f54e16ad16acb14f","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-2","para":"35-2","html":"
A lessee shall recognize amortization of the right-of-use asset and interest on the lease liability for a finance lease in accordance with paragraph 842-20-25-5.
","snippet":"A lessee shall recognize amortization of the right-of-use asset and interest on the lease liability for a finance lease in accordance with paragraph 842-20-25-5.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c234f10a718928ab0cce6783f54abecd5ac4468d4d0955caaaaffa44a329d67f","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-3","para":"35-3","html":"
After the commencement date, for an operating lease, a lessee shall measure both of the following:
  1. a
    The lease liability at the present value of the lease payments not yet paid discounted using the discount rate for the lease established at the commencement date (unless the rate has been updated after the commencement date in accordance with paragraph 842-20-35-5, in which case that updated rate shall be used)
  2. b
    The right-of-use asset at the amount of the lease liability, adjusted for the following, unless the right-of-use asset has been previously impaired, in which case the right-of-use asset is measured in accordance with paragraph 842-20-35-10 after the impairment:
    1. 1
      Prepaid or accrued lease payments
    2. 2
      The remaining balance of any lease incentives received, which is the amount of the gross lease incentives received net of amounts recognized previously as part of the single lease cost described in paragraph 842-20-25-6(a)
    3. 3
      Unamortized initial direct costs
    4. 4
      Impairment of the right-of-use asset.
","snippet":"After the commencement date, for an operating lease, a lessee shall measure both of the following:\n(a) The lease liability at the present value of the lease payments not yet paid discounted using the discount rate for th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e40375fc1e302ec16b435d6b07bb6657d0bd78d49e798fb12c7f416dcb538425","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:74e5793e22b967120c3bd9895a89c4ab626148c2c1564db337c82d5b8b59892f","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"block":null,"heading":"Remeasurement of the Lease Liability","paragraphs":[{"citation":"842-20-35-4","para":"35-4","html":"
After the commencement date, a lessee shall remeasure the lease liability to reflect changes to the lease payments as described in paragraphs
842-10-35-4 through 35-5
. A lessee shall recognize the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero, a lessee shall recognize any remaining amount of the remeasurement in profit or loss.
","snippet":"After the commencement date, a lessee shall remeasure the lease liability to reflect changes to the lease payments as described in paragraphs 842-10-35-4 through 35-5. A lessee shall recognize the amount of the remeasure…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6e2e9c0f483ca86c4ce6739c30a580d4c01be15546e4f7822dbe7b7ac2d94752","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-5","para":"35-5","html":"
If there is a remeasurement of the lease liability in accordance with paragraph 842-20-35-4, the lessee shall update the discount rate for the lease at the date of remeasurement on the basis of the remaining lease term and the remaining lease payments unless the remeasurement of the lease liability is the result of one of the following:
  1. a
    A change in the lease term or the assessment of whether the lessee will exercise an option to purchase the underlying asset and the discount rate for the lease already reflects that the lessee has an option to extend or terminate the lease or to purchase the underlying asset.
  2. b
    A change in amounts probable of being owed by the lessee under a residual value guarantee (see paragraph 842-10-35-4(c)(3)).
  3. c
    A change in the lease payments resulting from the resolution of a contingency upon which some or all of the variable lease payments that will be paid over the remainder of the lease term are based (see paragraph 842-10-35-4(b)).
","snippet":"If there is a remeasurement of the lease liability in accordance with paragraph 842-20-35-4, the lessee shall update the discount rate for the lease at the date of remeasurement on the basis of the remaining lease term a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54f089a91d7144a5f3011f8af65e896329db8d8ef41c61c52923f090e9e25da0","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-6","para":"35-6","html":"
See Examples 3 and 4 (paragraphs
842-20-55-21 through 55-46
) for an illustration of the requirements on lessee subsequent measurement.
","snippet":"See Examples 3 and 4 (paragraphs 842-20-55-21 through 55-46) for an illustration of the requirements on lessee subsequent measurement.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7ffd25aadebb3aacbfeecf5c02a97301e29b429347bf77fd78f30480c4153e82","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:efcdf60be393eaaab457d95b3fafa18e6581833b34a9c26324e2963cd93e4448","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"block":null,"heading":"Amortization of the Right-of-Use Asset for a Finance Lease","paragraphs":[{"citation":"842-20-35-7","para":"35-7","html":"
A lessee shall amortize the right-of-use asset on a straight-line basis, unless another systematic basis is more representative of the pattern in which the lessee expects to consume the right-of-use asset's future economic benefits. When the lease liability is remeasured and the right-of-use asset is adjusted in accordance with paragraph 842-20-35-4, amortization of the right-of-use asset shall be adjusted prospectively from the date of remeasurement.
","snippet":"A lessee shall amortize the right-of-use asset on a straight-line basis, unless another systematic basis is more representative of the pattern in which the lessee expects to consume the right-of-use asset's future econom…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eb2d6736645455d0081f50e28fcf515d389ea1d9ed727adfd57c02e97d85054a","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-8","para":"35-8","html":"
A lessee shall amortize the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. However, if the lease transfers ownership of the underlying asset to the lessee or the lessee is reasonably certain to exercise an option to purchase the underlying asset, the lessee shall amortize the right-of-use asset to the end of the useful life of the underlying asset.
","snippet":"A lessee shall amortize the right-of-use asset from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. However, if the lease transfers ownership of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3ca476b13bb967849da78774288a14b1cd22e8e8fb06838701dc3f7023298a72","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f11ceacb286b1bbb6d7cb4ab10c53935ea59279825938e1032863f88212e7a8e","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"block":null,"heading":"Impairment of a Right-of-Use Asset","paragraphs":[{"citation":"842-20-35-9","para":"35-9","html":"
A lessee shall determine whether a right-of-use asset is impaired and shall recognize any impairment loss in accordance with Section 360-10-35 on impairment or disposal of long-lived assets.
","snippet":"A lessee shall determine whether a right-of-use asset is impaired and shall recognize any impairment loss in accordance with Section 360-10-35 on impairment or disposal of long-lived assets.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3466c2bc4079589dda75c5a5f014339ce1b65bc8e18d292ed908af371820bc2","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-10","para":"35-10","html":"
If a right-of-use asset is impaired in accordance with paragraph 842-20-35-9, after the impairment, it shall be measured at its carrying amount immediately after the impairment less any accumulated amortization. A lessee shall amortize, in accordance with paragraph 842-20-25-7 (for an operating lease) or paragraph 842-20-35-7 (for a finance lease), the right-of-use asset from the date of the impairment to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term.
","snippet":"If a right-of-use asset is impaired in accordance with paragraph 842-20-35-9, after the impairment, it shall be measured at its carrying amount immediately after the impairment less any accumulated amortization. A lessee…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e50ef8be429a70f5fd8c04b2be0c65da8103394a57df4151656979e4e6af9280","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-11","para":"35-11","html":"
See Example 5 (paragraphs
842-20-55-47 through 55-51
) for an illustration of the requirements for impairment of a right-of-use asset.
","snippet":"See Example 5 (paragraphs 842-20-55-47 through 55-51) for an illustration of the requirements for impairment of a right-of-use asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:25877315e57a26464cb16df162b9bb5ef126fa120624a5e3236eeacadbe59ea2","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:11339956c498e26aca3b96b032498e9d6c7cc85a030b08ccf1448c56922754c6","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"block":null,"heading":"Amortization of Leasehold Improvements","paragraphs":[{"citation":"842-20-35-12","para":"35-12","html":"
Leasehold improvements, other than those accounted for in accordance with paragraph 842-20-35-12A, shall be amortized over the shorter of the useful life of those leasehold improvements and the remaining lease term, unless the lease transfers ownership of the underlying asset to the lessee or the lessee is reasonably certain to exercise an option to purchase the underlying asset, in which case the lessee shall amortize the leasehold improvements to the end of their useful life.
","snippet":"Leasehold improvements, other than those accounted for in accordance with paragraph 842-20-35-12A, shall be amortized over the shorter of the useful life of those leasehold improvements and the remaining lease term, unle…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cc8e7089deec1a233f3313bb846205b6fa9cc404ee2d844a59c2487b7ce230c0","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-12A","para":"35-12A","html":"
Leasehold improvements associated with a lease between entities under common control shall be:
  1. a
    Amortized over the useful life of those improvements to the common control group as long as the lessee controls the use of the underlying asset through a lease. If the lessor obtained the right to control the use of the underlying asset through a lease with another entity not within the same common control group, the amortization period shall not exceed the amortization period of the common control group determined in accordance with paragraph 842-20-35-12.
  2. b
    Accounted for as a transfer between entities under common control through an adjustment to equity (net assets for a not-for-profit entity) when the lessee no longer controls the use of the underlying asset.
","snippet":"Leasehold improvements associated with a lease between entities under common control shall be:\n(a) Amortized over the useful life of those improvements to the common control group as long as the lessee controls the use o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fcf9b1b65723870d3229cdd3a464d1e7b26b5df71791c719dac6bf80f2653057","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-12B","para":"35-12B","html":"
An entity with leasehold improvements accounted for in accordance with paragraph 842-20-35-12A shall apply the impairment requirements in paragraph 360-10-40-4, considering the useful life to the common control group.
","snippet":"An entity with leasehold improvements accounted for in accordance with paragraph 842-20-35-12A shall apply the impairment requirements in paragraph 360-10-40-4, considering the useful life to the common control group.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2b417eec9095ec4d61e09a5281cbfb08edb6dab713caab3fe6cd0924dc62df05","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-12C","para":"35-12C","html":"
If after the commencement date the lessee and lessor become within the same common control group or are no longer within the same common control group, any change in the required amortization period for leasehold improvements shall be accounted for prospectively as a change in accounting estimate in accordance with paragraph 250-10-45-17.
","snippet":"If after the commencement date the lessee and lessor become within the same common control group or are no longer within the same common control group, any change in the required amortization period for leasehold improve…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e4f321533d98d04f5b79859d95b13d3548889a2136118b5dbcef8b56925972f7","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-13","para":"35-13","html":"
Leasehold improvements acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation shall be amortized over the shorter of the useful life of the assets and the remaining lease term at the date of acquisition.
","snippet":"Leasehold improvements acquired in a business combination, acquired in an acquisition by a not-for-profit entity, or recognized by a joint venture upon formation shall be amortized over the shorter of the useful life of …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56f004212a5d0a6f840c242850a18ec16a2b9c6f91c6d4e95501cc435554b33d","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b7a9d3c65ec1d83780cab951928c8ae2b8dee29e5d36385fec9956325830f7e1","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"block":null,"heading":"Subleases","paragraphs":[{"citation":"842-20-35-14","para":"35-14","html":"
If the nature of a sublease is such that the original lessee is not relieved of the primary obligation under the original lease, the original lessee (as sublessor) shall continue to account for the original lease in one of the following ways:
  1. a
    If the sublease is classified as an operating lease, the original lessee shall continue to account for the original lease as it did before commencement of the sublease. If the lease cost for the term of the sublease exceeds the anticipated sublease income for that same period, the original lessee shall treat that circumstance as an indicator that the carrying amount of the right-of-use asset associated with the original lease may not be recoverable in accordance with paragraph 360-10-35-21.
  2. b
    If the original lease is classified as a finance lease and the sublease is classified as a sales-type lease or a direct financing lease, the original lessee shall derecognize the original right-of-use asset in accordance with paragraph 842-30-40-1 and continue to account for the original lease liability as it did before commencement of the sublease. The original lessee shall evaluate its investment in the sublease for impairment in accordance with paragraph 842-30-35-3.
  3. c
    If the original lease is classified as an operating lease and the sublease is classified as a sales-type lease or a direct financing lease, the original lessee shall derecognize the original right-of-use asset in accordance with paragraph 842-30-40-1 and, from the sublease commencement date, account for the original lease liability in accordance with paragraphs
    842-20-35-1 through 35-2
    . The original lessee shall evaluate its investment in the sublease for impairment in accordance with paragraph 842-30-35-3.
","snippet":"If the nature of a sublease is such that the original lessee is not relieved of the primary obligation under the original lease, the original lessee (as sublessor) shall continue to account for the original lease in one …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2885ea238c55246f9e57e875694a6dc0a9d811e2b92f575eb9b68d0c0c4bc149","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"citation":"842-20-35-15","para":"35-15","html":"
The original lessee (as sublessor) in a sublease shall use the rate implicit in the lease to determine the classification of the sublease and to measure the net investment in the sublease if the sublease is classified as a sales-type or a direct financing lease unless that rate cannot be readily determined. If the rate implicit in the lease cannot be readily determined, the original lessee may use the discount rate for the lease established for the original (or head) lease.
","snippet":"The original lessee (as sublessor) in a sublease shall use the rate implicit in the lease to determine the classification of the sublease and to measure the net investment in the sublease if the sublease is classified as…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f2140fc8f56e7a4deaf47c28e22056804a568aadb11197ee69ca2735ceae3140","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:86375a581b1e17783087bc6b1f5ddebf7e2ba05fdb24d2273ec9271c0a4f767e","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c0bf02335b8acbe9fe21f16ad20591a9aef558cf797553bd12887fc4971ded15","downloaded_from":"2026-09-10T01:56:44.820Z","last_downloaded_at":"2026-09-10T01:56:44.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479165","source_sha256":"75b751611a0650e5b83c43ca2fd213fc91a763b9ab7c48d2e54360c776bb7e36"}},{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":"Lease Termination","paragraphs":[{"citation":"842-20-40-1","para":"40-1","html":"
A termination of a lease before the expiration of the lease term shall be accounted for by the lessee by removing the right-of-use asset and the lease liability, with profit or loss recognized for the difference.
","snippet":"A termination of a lease before the expiration of the lease term shall be accounted for by the lessee by removing the right-of-use asset and the lease liability, with profit or loss recognized for the difference.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:024d22b87882fe90f83ef320d38b4a1594ef4e8654cc649dcd9523bcafd6c4aa","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}},{"citation":"842-20-40-2","para":"40-2","html":"
The termination of a lease that results from the purchase of an underlying asset by the lessee is not the type of termination of a lease contemplated by paragraph 842-20-40-1 but, rather, is an integral part of the purchase of the underlying asset. If the lessee purchases the underlying asset, any difference between the purchase price and the carrying amount of the lease liability immediately before the purchase shall be recorded by the lessee as an adjustment of the carrying amount of the asset. However, this paragraph does not apply to underlying assets acquired in a business combination, which are initially measured at fair value in accordance with paragraph 805-20-30-1.
","snippet":"The termination of a lease that results from the purchase of an underlying asset by the lessee is not the type of termination of a lease contemplated by paragraph 842-20-40-1 but, rather, is an integral part of the purch…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4605da6f3227a942c5bf3f2fa433c548ef1f9c284d946a9c9af12d3d02b54f81","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a4dfcefe7d26ecd1b53f4efbbcf5f3b73ec92741f6afe0e52cbadf142ef3f438","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}},{"block":null,"heading":"Subleases","paragraphs":[{"citation":"842-20-40-3","para":"40-3","html":"
If the nature of a sublease is such that the original lessee is relieved of the primary obligation under the original lease, the transaction shall be considered a termination of the original lease. Paragraph 842-20-35-14 addresses subleases in which the original lessee is not relieved of the primary obligation under the original lease. Any consideration paid or received upon termination that was not already included in the lease payments (for example, a termination payment that was not included in the lease payments based on the lease term) shall be included in the determination of profit or loss to be recognized in accordance with paragraph 842-20-40-1. If a sublease is a termination of the original lease and the original lessee is secondarily liable, the guarantee obligation shall be recognized by the lessee in accordance with paragraph 405-20-40-2.
","snippet":"If the nature of a sublease is such that the original lessee is relieved of the primary obligation under the original lease, the transaction shall be considered a termination of the original lease. Paragraph 842-20-35-14…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7fcf2a08c4e18697b2d4c3ae2dd2939d3884f4631d33d74d4a4d45865db569e9","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:84ac2e43b16b11323277550fbce5e852ccee0bd319e6bd511fe03e06c9a825ab","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:309b912d5a73ef73687811a49e0a8f461bb86ae12989b4d0f25bf542fc714706","downloaded_from":"2026-09-10T01:56:47.806Z","last_downloaded_at":"2026-09-10T01:56:47.806Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479092","source_sha256":"615c7e2222d740dc772a07f970521f29a48a504651aa85e37d25a693ef48fbe7"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":"Statement of Financial Position","paragraphs":[{"citation":"842-20-45-1","para":"45-1","html":"
A lessee shall either present in the statement of financial position or disclose in the notes all of the following:
  1. a
    Finance lease right-of-use assets and operating lease right-of-use assets separately from each other and from other assets
  2. b
    Finance lease liabilities and operating lease liabilities separately from each other and from other liabilities.
Right-of-use assets and lease liabilities shall be subject to the same considerations as other nonfinancial assets and financial liabilities in classifying them as current and noncurrent in classified statements of financial position.
","snippet":"A lessee shall either present in the statement of financial position or disclose in the notes all of the following:\n(a) Finance lease right-of-use assets and operating lease right-of-use assets separately from each other…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:14e85278918a72aa2f838e4c3d0c3ec5dd1931dcfc73fbe1cf7141dd05c2ab9e","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}},{"citation":"842-20-45-2","para":"45-2","html":"
If a lessee does not present finance lease and operating lease right-of-use assets and lease liabilities separately in the statement of financial position, the lessee shall disclose which line items in the statement of financial position include those right-of-use assets and lease liabilities.
","snippet":"If a lessee does not present finance lease and operating lease right-of-use assets and lease liabilities separately in the statement of financial position, the lessee shall disclose which line items in the statement of f…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:908841b1eee360e8fcdf88f330a6ba07678fb10826146121c8eaf1ca7c442d5e","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}},{"citation":"842-20-45-3","para":"45-3","html":"
In the statement of financial position, a lessee is prohibited from presenting both of the following:
  1. a
    Finance lease right-of-use assets in the same line item as operating lease right-of-use assets
  2. b
    Finance lease liabilities in the same line item as operating lease liabilities.
","snippet":"In the statement of financial position, a lessee is prohibited from presenting both of the following:\n(a) Finance lease right-of-use assets in the same line item as operating lease right-of-use assets\n(b) Finance lease l…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9094e7b80d6796f932d02c0507358823609271ca698e5056052f72a6f8f08dab","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2fc9aaa18513c7e9a397356465abfaac15db445011828a6d8c1c576dcd8fdf43","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}},{"block":null,"heading":"Statement of Comprehensive Income","paragraphs":[{"citation":"842-20-45-4","para":"45-4","html":"
In the statement of comprehensive income, a lessee shall present both of the following:
  1. a
    For finance leases, the interest expense on the lease liability and amortization of the right-of-use asset are not required to be presented as separate line items and shall be presented in a manner consistent with how the entity presents other interest expense and depreciation or amortization of similar assets, respectively
  2. b
    For operating leases, lease expense shall be included in the lessee's income from continuing operations.
","snippet":"In the statement of comprehensive income, a lessee shall present both of the following:\n(a) For finance leases, the interest expense on the lease liability and amortization of the right-of-use asset are not required to b…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:462979491902f5ac543e3853cf8333e110ca27479d8888225eb4d590a5ab8c97","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5239dcebf70c76ebf2bd833291d1eb3d439403365fdb6cba6fa3bc558c270a2d","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}},{"block":null,"heading":"Statement of Cash Flows","paragraphs":[{"citation":"842-20-45-5","para":"45-5","html":"
In the statement of cash flows, a lessee shall classify all of the following:
  1. a
    Repayments of the principal portion of the lease liability arising from finance leases within financing activities
  2. b
    Interest on the lease liability arising from finance leases in accordance with the requirements relating to interest paid in Topic 230 on cash flows
  3. c
    Payments arising from operating leases within operating activities, except to the extent that those payments represent costs to bring another asset to the condition and location necessary for its intended use, which should be classified within investing activities
  4. d
    Variable lease payments and short-term lease payments not included in the lease liability within operating activities.
","snippet":"In the statement of cash flows, a lessee shall classify all of the following:\n(a) Repayments of the principal portion of the lease liability arising from finance leases within financing activities\n(b) Interest on the lea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:70365eec1631233efc1b67452c3ff6e88ea73175b539407b6b419cc22c199e4b","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7570ceef133089b89513804f5b3a260d2be0bbd24a0355475cba835d04c9b315","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a731fd98b6e55d46516de819ac97e06f8d976e7e98bce16febed45b1526dd8eb","downloaded_from":"2026-09-10T01:56:51.193Z","last_downloaded_at":"2026-09-10T01:56:51.193Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479041","source_sha256":"97b49d3a8d2fa20c73e35f088ae8e6a1dfeba852de187628983d0d5d540a7273"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-20-50-1","para":"50-1","html":"
The objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. To achieve that objective, a lessee shall disclose qualitative and quantitative information about all of the following:
  1. a
    Its leases (as described in paragraphs 842-20-50-3(a) through (b) and
    842-20-50-7 through 50-10
    )
  2. b
    The significant judgments made in applying the requirements in this Topic to those leases (as described in paragraph 842-20-50-3(c))
  3. c
    The amounts recognized in the financial statements relating to those leases (as described in paragraphs 842-20-50-4 and 842-20-50-6).
","snippet":"The objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. To achieve that objective, a lessee shall disclose …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6dcad2341893d11ae0c66f82e44d35763bc0cfeb8ffa21a6196637318acdac08","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-2","para":"50-2","html":"
A lessee shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. A lessee shall aggregate or disaggregate disclosures so that useful information is not obscured by including a large amount of insignificant detail or by aggregating items that have different characteristics.
","snippet":"A lessee shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. A lessee shall aggregate or disaggregate disclosures so that u…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6fceced820e71c5db06391672716ec764dc168bceefcf271a2eb64af317cc2da","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-3","para":"50-3","html":"
A lessee shall disclose all of the following:
  1. a
    Information about the nature of its leases, including:
    1. 1
      A general description of those leases.
    2. 2
      The basis and terms and conditions on which variable lease payments are determined.
    3. 3
      The existence and terms and conditions of options to extend or terminate the lease. A lessee should provide narrative disclosure about the options that are recognized as part of its right-of-use assets and lease liabilities and those that are not.
    4. 4
      The existence and terms and conditions of residual value guarantees provided by the lessee.
    5. 5
      The restrictions or covenants imposed by leases, for example, those relating to dividends or incurring additional financial obligations.
    A lessee should identify the information relating to subleases included in the disclosures provided in (1) through (5), as applicable.
  2. b
    Information about leases that have not yet commenced but that create significant rights and obligations for the lessee, including the nature of any involvement with the construction or design of the underlying asset.
  3. c
    Information about significant assumptions and judgments made in applying the requirements of this Topic, which may include the following:
    1. 1
      The determination of whether a contract contains a lease (as described in paragraphs
      842-10-15-2 through 15-27
      )
    2. 2
      The allocation of the consideration in a contract between lease and nonlease components (as described in paragraphs
      842-10-15-28 through 15-32
      )
    3. 3
      The determination of the discount rate for the lease (as described in paragraphs
      842-20-30-2 through 30-4
      ).
","snippet":"A lessee shall disclose all of the following:\n(a) Information about the nature of its leases, including:\n(1) A general description of those leases.\n(2) The basis and terms and conditions on which variable lease payments …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5590ba9456049860cde5198107b603a171291285c0b9031dea92e69b7c01eda3","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-4","para":"50-4","html":"
For each period presented in the financial statements, a lessee shall disclose the following amounts relating to a lessee's total lease cost, which includes both amounts recognized in profit or loss during the period and any amounts capitalized as part of the cost of another asset in accordance with other Topics, and the cash flows arising from lease transactions:
  1. a
    Finance lease cost, segregated between the amortization of the right-of-use assets and interest on the lease liabilities.
  2. b
    Operating lease cost determined in accordance with paragraphs 842-20-25-6(a) and 842-20-25-7.
  3. c
    Short-term lease cost, excluding expenses relating to leases with a lease term of one month or less, determined in accordance with paragraph 842-20-25-2.
  4. d
    Variable lease cost determined in accordance with paragraphs 842-20-25-5(b) and 842-20-25-6(b).
  5. e
    Sublease income, disclosed on a gross basis, separate from the finance or operating lease expense.
  6. f
    Net gain or loss recognized from sale and leaseback transactions in accordance with paragraph 842-40-25-4.
  7. g
    Amounts segregated between those for finance and operating leases for the following items:
    1. 1
      Cash paid for amounts included in the measurement of lease liabilities, segregated between operating and financing cash flows
    2. 2
      Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
    3. 3
      Weighted-average remaining lease term
    4. 4
      Weighted-average discount rate.
Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:
220-40-65-1For each period presented in the financial statements, a lessee shall disclose the following amounts relating to a lessee's total lease cost, which includes both amounts recognized in profit or loss during the period and any amounts capitalized as part of the cost of another asset in accordance with other Topics, and the cash flows arising from lease transactions:
  1. a
    Finance lease cost, segregated between the amortization of the right-of-use assets and interest on the lease liabilities.
  2. b
    Operating lease cost determined in accordance with paragraphs 842-20-25-6(a) and 842-20-25-7.
  3. c
    Short-term lease cost, excluding expenses relating to leases with a lease term of one month or less, determined in accordance with paragraph 842-20-25-2.
  4. d
    Variable lease cost determined in accordance with paragraphs 842-20-25-5(b) and 842-20-25-6(b).
  5. e
    Sublease income, disclosed on a gross basis, separate from the finance or operating lease expense.
  6. f
    Net gain or loss recognized from sale and leaseback transactions in accordance with paragraph 842-40-25-4.
  7. g
    Amounts segregated between those for finance and operating leases for the following items:
    1. 1
      Cash paid for amounts included in the measurement of lease liabilities, segregated between operating and financing cash flows
    2. 2
      Supplemental noncash information on lease liabilities arising from obtaining right-of-use assets
    3. 3
      Weighted-average remaining lease term
    4. 4
      Weighted-average discount rate.
See paragraphs
220-40-50-21 through 50-25
for additional disclosure requirements.
","snippet":"For each period presented in the financial statements, a lessee shall disclose the following amounts relating to a lessee's total lease cost, which includes both amounts recognized in profit or loss during the period and…","pending":true,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbf0a063cfd8777057400c9acc8f6dc6ad38737154114ba864643df45303fa86","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-5","para":"50-5","html":"
See paragraphs
842-20-55-11 through 55-12
for implementation guidance on preparing the weighted-average remaining lease term and the weighted-average discount rate disclosures. See Example 6 (paragraphs
842-20-55-52 through 55-53
) for an illustration of the lessee quantitative disclosure requirements in paragraph 842-20-50-4.
","snippet":"See paragraphs 842-20-55-11 through 55-12 for implementation guidance on preparing the weighted-average remaining lease term and the weighted-average discount rate disclosures. See Example 6 (paragraphs 842-20-55-52 thro…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5f70492fd3ec003a691a8fdbc4c265bf30ec23b7464e00fe6546d1c358e0ebca","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-6","para":"50-6","html":"
A lessee shall disclose a maturity analysis of its finance lease liabilities and its operating lease liabilities separately, showing the undiscounted cash flows on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessee shall disclose a reconciliation of the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recognized in the statement of financial position.
","snippet":"A lessee shall disclose a maturity analysis of its finance lease liabilities and its operating lease liabilities separately, showing the undiscounted cash flows on an annual basis for a minimum of each of the first five …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c51df03dfa17d86a684363fd5c9c9a06fcd728d602ea9b5cc06e356a3416cfd4","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-7","para":"50-7","html":"
A lessee shall disclose lease transactions between related parties in accordance with paragraphs
850-10-50-1 through 50-6
.
","snippet":"A lessee shall disclose lease transactions between related parties in accordance with paragraphs 850-10-50-1 through 50-6.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:68c6a86e2783e69d0b563f73b5a3ba1e08032cbab59e50a5a100c34193a9c899","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-7A","para":"50-7A","html":"
When the useful life of leasehold improvements to the common control group determined in accordance with paragraph 842-20-35-12A exceeds the related lease term, a lessee shall disclose the following information:
  1. a
    The unamortized balance of the leasehold improvements at the balance sheet date
  2. b
    The remaining useful life of the leasehold improvements to the common control group
  3. c
    The remaining lease term.
","snippet":"When the useful life of leasehold improvements to the common control group determined in accordance with paragraph 842-20-35-12A exceeds the related lease term, a lessee shall disclose the following information:\n(a) The …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6c2f36ead616186ac671d2e3cc1784d010733f4dbd3e14c85bd83dd0c1927fc","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-8","para":"50-8","html":"
A lessee that accounts for short-term leases in accordance with paragraph 842-20-25-2 shall disclose that fact. If the short-term lease expense for the period does not reasonably reflect the lessee's short-term lease commitments, a lessee shall disclose that fact and the amount of its short-term lease commitments.
","snippet":"A lessee that accounts for short-term leases in accordance with paragraph 842-20-25-2 shall disclose that fact. If the short-term lease expense for the period does not reasonably reflect the lessee's short-term lease com…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e7c232b2f2fe2d4ebc7cdd884f76608fc0e1b906881f076c2f5299e2b1ec2238","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-9","para":"50-9","html":"
A lessee that elects the practical expedient on not separating lease components from nonlease components in paragraph 842-10-15-37 shall disclose its accounting policy election and which class or classes of underlying assets it has elected to apply the practical expedient.
","snippet":"A lessee that elects the practical expedient on not separating lease components from nonlease components in paragraph 842-10-15-37 shall disclose its accounting policy election and which class or classes of underlying as…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa81154b21a1d2921bb32521bbee7b82d0b18eee163245e1bc14caacbdcec375","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"citation":"842-20-50-10","para":"50-10","html":"
A lessee that makes the accounting policy election in paragraph 842-20-30-3 to use a risk-free rate as the discount rate shall disclose its election and the class or classes of underlying assets to which the election has been applied.
","snippet":"A lessee that makes the accounting policy election in paragraph 842-20-30-3 to use a risk-free rate as the discount rate shall disclose its election and the class or classes of underlying assets to which the election has…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f1dc381883b4ea079d8f0cde7a64c6cbd05bae17b425f274d246bbacd142a767","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4c07a4302e8aebbf83946c542338535e1a7e00365d94e517a0bf6bc62fbdcd6a","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:81f66780108ffa67ccf7faefaf0f824d1efbe6f6eabb1c6bc3395d8354c52ee3","downloaded_from":"2026-09-10T01:56:55.303Z","last_downloaded_at":"2026-09-10T01:56:55.303Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478964","source_sha256":"efdc99455b24208b8333821bbad1f2ea0e2805e1488b0ba508bdd4aec04da415"}},{"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":"842-20-55-1","para":"55-1","html":"
A lessee should recognize costs from variable lease payments (in annual periods as well as in interim periods) before the achievement of the specified target that triggers the variable lease payments, provided the achievement of that target is considered probable.
","snippet":"A lessee should recognize costs from variable lease payments (in annual periods as well as in interim periods) before the achievement of the specified target that triggers the variable lease payments, provided the achiev…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78c6e31c9a6f34586f66c0c7225c794eadaf10d272f1f94f3e9e6843dd9f2051","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-2","para":"55-2","html":"
Variable lease costs recognized in accordance with paragraph 842-20-55-1 should be reversed at such time that it is probable that the specified target will not be met.
","snippet":"Variable lease costs recognized in accordance with paragraph 842-20-55-1 should be reversed at such time that it is probable that the specified target will not be met.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58563d988ba97456c3be69dc729b868700188a28b784e056e001ba8ea41f5de2","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-3","para":"55-3","html":"
This Subtopic considers the right to control the use of the underlying asset as the equivalent of physical use. If the lessee controls the use of the underlying asset, recognition of lease cost in accordance with paragraph 842-20-25-6(a) or amortization of the right-of-use asset in accordance with paragraph 842-20-35-7 should not be affected by the extent to which the lessee uses the underlying asset.
","snippet":"This Subtopic considers the right to control the use of the underlying asset as the equivalent of physical use. If the lessee controls the use of the underlying asset, recognition of lease cost in accordance with paragra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0413995d13e69f2b40540d385398b88f67f0be047e4b55082532098db2ffe62e","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-4","para":"55-4","html":"
Under certain leases (for example, certain equipment leases), a lessee is legally or contractually responsible for repair and maintenance of the underlying asset throughout the lease term. Additionally, certain lease agreements include provisions requiring the lessee to make deposits to the lessor to financially protect the lessor in the event the lessee does not properly maintain the underlying asset. Lease agreements often refer to these deposits as maintenance reserves or supplemental rent. However, the lessor is required to reimburse the deposits to the lessee on the completion of maintenance activities that the lessee is contractually required to perform under the lease agreement.
","snippet":"Under certain leases (for example, certain equipment leases), a lessee is legally or contractually responsible for repair and maintenance of the underlying asset throughout the lease term. Additionally, certain lease agr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6b54eaf923d30b59017b65e5167fa5435a485e596a1aaad2675744704b7baa0","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-5","para":"55-5","html":"
Under a typical arrangement, maintenance deposits are calculated on the basis of a performance measure, such as hours of use of the underlying asset, and are contractually required under the terms of the lease agreement to be used to reimburse the lessee for required maintenance of the underlying asset on the completion of that maintenance. The lessor is contractually required to reimburse the lessee for the maintenance costs paid by the lessee, to the extent of the amounts on deposit.
","snippet":"Under a typical arrangement, maintenance deposits are calculated on the basis of a performance measure, such as hours of use of the underlying asset, and are contractually required under the terms of the lease agreement …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1fcde55f6be21e824428fc444c0c7ea54af622fbd2987edac10786da898a1a92","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-6","para":"55-6","html":"
In some cases, the total cost of cumulative maintenance events over the term of the lease is less than the cumulative deposits, which results in excess amounts on deposit at the expiration of the lease. In those cases, some lease agreements provide that the lessor is entitled to retain such excess amounts, whereas other agreements specifically provide that, at the expiration of the lease agreement, such excess amounts are returned to the lessee (refundable maintenance deposit).
","snippet":"In some cases, the total cost of cumulative maintenance events over the term of the lease is less than the cumulative deposits, which results in excess amounts on deposit at the expiration of the lease. In those cases, s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b362ddc8026253e1daf409c9ea38c0449ae5c5e5ccfa84f5d6d0bb9912fc698a","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-7","para":"55-7","html":"
The guidance in paragraphs
842-20-55-8 through 55-9
does not apply to payments to a lessor that are not substantively and contractually related to maintenance of the leased asset. If at the commencement date a lessee determines that it is less than probable that the total amount of payments will be returned to the lessee as a reimbursement for maintenance activities, the lessee should consider that when determining the portion of each payment that is not addressed by the guidance in paragraphs
842-20-55-8 through 55-9
.
","snippet":"The guidance in paragraphs 842-20-55-8 through 55-9 does not apply to payments to a lessor that are not substantively and contractually related to maintenance of the leased asset. If at the commencement date a lessee det…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3f8c301c6c56582acff04772ba78758e93a86e43453facdaebbfa69b798bf84e","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-8","para":"55-8","html":"
Maintenance deposits paid by a lessee under an arrangement accounted for as a lease that are refunded only if the lessee performs specified maintenance activities should be accounted for as a deposit asset.
","snippet":"Maintenance deposits paid by a lessee under an arrangement accounted for as a lease that are refunded only if the lessee performs specified maintenance activities should be accounted for as a deposit asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d4d6c9659b43886f39b9f37dd06e9261c5a63ab23a0f7644701f023933012c6","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-9","para":"55-9","html":"
A lessee should evaluate whether it is probable that an amount on deposit recognized under paragraph 842-20-55-8 will be returned to reimburse the costs of the maintenance activities incurred by the lessee. When an amount on deposit is less than probable of being returned, it should be recognized in the same manner as variable lease expense. When the underlying maintenance is performed, the maintenance costs should be expensed or capitalized in accordance with the lessee's maintenance accounting policy.
","snippet":"A lessee should evaluate whether it is probable that an amount on deposit recognized under paragraph 842-20-55-8 will be returned to reimburse the costs of the maintenance activities incurred by the lessee. When an amoun…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:78dbe2b5ae8c456275ba351c5274e7ef01bf6f3398d37d03b29eba7d0f95d941","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-10","para":"55-10","html":"
The right-of-use asset is a nonmonetary asset while the lease liability is a monetary liability. Therefore, in accordance with Subtopic 830-10 on foreign currency matters, when accounting for a lease that is denominated in a foreign currency, if remeasurement into the lessee's functional currency is required, the lease liability is remeasured using the current exchange rate, while the right-of-use asset is remeasured using the exchange rate as of the commencement date.
","snippet":"The right-of-use asset is a nonmonetary asset while the lease liability is a monetary liability. Therefore, in accordance with Subtopic 830-10 on foreign currency matters, when accounting for a lease that is denominated …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3a82395f12b2c28d52d2774f8238ab92f935be566875b1da1138e009d31aac2d","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-11","para":"55-11","html":"
The lessee should calculate the weighted-average remaining lease term on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.
","snippet":"The lessee should calculate the weighted-average remaining lease term on the basis of the remaining lease term and the lease liability balance for each lease as of the reporting date.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:98361196994c1962ec2ed1f57a1ba3f93a5209a2e15267e1f7393a3d879198d1","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-12","para":"55-12","html":"
The lessee should calculate the weighted-average discount rate on the basis of both of the following:
  1. a
    The discount rate for the lease that was used to calculate the lease liability balance for each lease as of the reporting date
  2. b
    The remaining balance of the lease payments for each lease as of the reporting date.
","snippet":"The lessee should calculate the weighted-average discount rate on the basis of both of the following:\n(a) The discount rate for the lease that was used to calculate the lease liability balance for each lease as of the re…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4fd72513a02e29bcbd48f24844a9e0baab7ef90acad639fd4de1f46d8fb0dcf5","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d8e8cd0ea226416854b67970c5109f7e1723e5b276001a730665621a79d60711","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-20-55-13","para":"55-13","html":"
Example 1 illustrates the assessment of whether a lease is a short-term lease.
","snippet":"Example 1 illustrates the assessment of whether a lease is a short-term lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:db697b221a8d2f29264a3ef8f86e93b248e25df8f79987e7f33bcf49ec4b4a52","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-14","para":"55-14","html":"
Lessee has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from short-term leases for any class of underlying asset.
","snippet":"Lessee has made an accounting policy election not to recognize right-of-use assets and lease liabilities that arise from short-term leases for any class of underlying asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:245b9cc29cb2208f2410bf7080f37ed32abb6ad2192fea2822b37357a0f766d8","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-15","para":"55-15","html":"
Lessee enters into a 12-month lease of a vehicle, with an option to extend for another 12 months. Lessee has considered all relevant factors and determined that it is not reasonably certain to exercise the option to extend. Because at lease commencement Lessee is not reasonably certain to exercise the option to extend, the lease term is 12 months.
","snippet":"Lessee enters into a 12-month lease of a vehicle, with an option to extend for another 12 months. Lessee has considered all relevant factors and determined that it is not reasonably certain to exercise the option to exte…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ebd5261e9607d86251982dda512ceb8498870c2b0c32c39d88798d5b145facc","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-16","para":"55-16","html":"
The lease meets the definition of a short-term lease because the lease term is 12 months or less. Consequently, consistent with Lessee's accounting policy election, Lessee does not recognize the right-of-use asset and the lease liability arising from this lease.
","snippet":"The lease meets the definition of a short-term lease because the lease term is 12 months or less. Consequently, consistent with Lessee's accounting policy election, Lessee does not recognize the right-of-use asset and th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7010dbf0cb269825901de0401b4f166baf1dc40c7269bb4d58e7fb320ef3831b","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-17","para":"55-17","html":"
Example 2 illustrates the determination of the discount rate for the lease.
","snippet":"Example 2 illustrates the determination of the discount rate for the lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:64f4bec4be9c51363acfbfed90ce421038611f8103627d4b829b8d8b2d1dc34c","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-18","para":"55-18","html":"
Lessee, a public entity, is the parent of several consolidated subsidiaries. During the current period, 2 subsidiaries entered into a total of 400 individual leases of large computer servers, each with terms ranging between 4 and 5 years and annual payments ranging between $60,000 and $100,000, depending on the hardware capacity of the servers. In aggregate, total lease payments for these leases amount to $30 million.
","snippet":"Lessee, a public entity, is the parent of several consolidated subsidiaries. During the current period, 2 subsidiaries entered into a total of 400 individual leases of large computer servers, each with terms ranging betw…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b5b7b4bcb4fa195aaef55bfa5aeb9f1acbe47c4a6eb2adb8798afde31b5ed588","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-19","para":"55-19","html":"
The individual lease contracts do not provide information about the rate implicit in the lease. Lessee is BBB credit rated and actively raises debt in the corporate bond market. Both subsidiaries are unrated and do not actively engage in treasury operations in their respective markets. On the basis of its credit rating and the collateral represented by the leased servers, Lessee's incremental borrowing rate on $60,000 through $100,000 (the range of lease payments on each of the 400 leases) would be approximately 4 percent. Lessee notes that 5-year zero-coupon U.S. Treasury instruments are currently yielding 1.7 percent (a risk-free rate). Because Lessee conducts its treasury operations centrally (that is, at the consolidated group level), it is reasonably assumed that consideration of the group credit standing factored into how each lease was priced.
","snippet":"The individual lease contracts do not provide information about the rate implicit in the lease. Lessee is BBB credit rated and actively raises debt in the corporate bond market. Both subsidiaries are unrated and do not a…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0de1f497dcc054eba2e98fc343499a9d4e7609aa6dd60fda1c6f67e4749a63a","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-20","para":"55-20","html":"
Lessee may determine the discount rate for the lease for the 400 individual leases entered into on different dates throughout the current period by using a portfolio approach. That is, Lessee can apply a single discount rate to the portfolio of new leases. This is because during the period, the new leases are all of similar terms (four to five years), and Lessee's credit rating and the interest rate environment are stable. Because the pricing of the lease is influenced by the credit standing and profile of Lessee rather than the subsidiaries (that is, because Lessee conducts treasury operations for the consolidated group), Lessee concludes that its incremental borrowing rate of 4 percent is an appropriate discount rate for each of the 400 leases entered into by Lessee's 2 subsidiaries during the period. Because Lessee is a public entity, it is not permitted to use a risk-free discount rate.
","snippet":"Lessee may determine the discount rate for the lease for the 400 individual leases entered into on different dates throughout the current period by using a portfolio approach. That is, Lessee can apply a single discount …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9a0f192e30857e0c42d72449d69cff1da86950024b1d7d8b0c031aa840eaef5d","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-21","para":"55-21","html":"
Example 3 illustrates how a lessee would initially and subsequently measure right-of-use assets and lease liabilities and how a lessee would account for a change in the lease term.
","snippet":"Example 3 illustrates how a lessee would initially and subsequently measure right-of-use assets and lease liabilities and how a lessee would account for a change in the lease term.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f01b004da29ae7dcdad1df6673483f453f5e46a5a50bf79411db1a5335b9e912","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-22","para":"55-22","html":"
Lessee enters into a 10-year lease of an asset, with an option to extend for an additional 5 years. Lease payments are $50,000 per year during the initial term and $55,000 per year during the optional period, all payable at the beginning of each year. Lessee incurs initial direct costs of $15,000.
","snippet":"Lessee enters into a 10-year lease of an asset, with an option to extend for an additional 5 years. Lease payments are $50,000 per year during the initial term and $55,000 per year during the optional period, all payable…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8ef158d135ec0eb9fa632e463eaf34656e4727bbcae3092f68c66aea304ad36e","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-23","para":"55-23","html":"
At the commencement date, Lessee concludes that it is not reasonably certain to exercise the option to extend the lease and, therefore, determines the lease term to be 10 years.
","snippet":"At the commencement date, Lessee concludes that it is not reasonably certain to exercise the option to extend the lease and, therefore, determines the lease term to be 10 years.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:baddf7536cbfd8828298e57eac19dd5ae04e0a4fe64876e9006dddb59c1dc3eb","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-24","para":"55-24","html":"
The rate implicit in the lease is not readily determinable. Lessee's incremental borrowing rate is 5.87 percent, which reflects the fixed rate at which Lessee could borrow a similar amount in the same currency, for the same term, and with similar collateral as in the lease at the commencement date.
","snippet":"The rate implicit in the lease is not readily determinable. Lessee's incremental borrowing rate is 5.87 percent, which reflects the fixed rate at which Lessee could borrow a similar amount in the same currency, for the s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1c91afc31a6a55a850e25507ecd20a43d8aa121ae36252e07e702986b69e89ec","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-25","para":"55-25","html":"
At the commencement date, Lessee makes the lease payment for the first year, incurs initial direct costs, and measures the lease liability at the present value of the remaining 9 payments of $50,000, discounted at the rate of 5.87 percent, which is $342,017. Lessee also measures a right-of-use asset of $407,017 (the initial measurement of the lease liability plus the initial direct costs and the lease payment for the first year).
","snippet":"At the commencement date, Lessee makes the lease payment for the first year, incurs initial direct costs, and measures the lease liability at the present value of the remaining 9 payments of $50,000, discounted at the ra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a37c180c660d059fd83f1119498e1d53201e868303c6744f4e5b56c112563bab","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-26","para":"55-26","html":"
During the first year of the lease, Lessee recognizes lease expense depending on how the lease is classified. Paragraphs
842-20-55-27 through 55-30
illustrate the lease expense depending on whether the lease is classified as a finance lease or as an operating lease.
","snippet":"During the first year of the lease, Lessee recognizes lease expense depending on how the lease is classified. Paragraphs 842-20-55-27 through 55-30 illustrate the lease expense depending on whether the lease is classifie…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a62515f86b0b688290717e771e4859a830ccbd73f643fd170cea54ff4e02fdc2","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-27","para":"55-27","html":"
Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset would be amortized on a straight-line basis over the 10-year lease term. The lease liability is increased to reflect the Year 1 interest on the lease liability in accordance with the interest method. As such, in Year 1 of the lease, Lessee recognizes the amortization expense of $40,702 ($407,017 ÷ 10) and the interest expense of $20,076 (5.87% × $342,017).
","snippet":"Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset would be amortized on a straight-line basis over the 10-year lease term. The lease liability is increased to reflect the Yea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:754569f99083f255197fb75c637c2835322388281965b351d574a9dca3079d74","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-28","para":"55-28","html":"
At the end of the first year of the lease, the carrying amount of Lessee's lease liability is $362,093 ($342,017 + $20,076), and the carrying amount of the right-of-use asset is $366,315 ($407,017 - $40,702).
","snippet":"At the end of the first year of the lease, the carrying amount of Lessee's lease liability is $362,093 ($342,017 + $20,076), and the carrying amount of the right-of-use asset is $366,315 ($407,017 - $40,702).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:151b4b5ac1a4561118fa73349449b547ba05d3c1b36fa6572c75d14e95f6d35c","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-29","para":"55-29","html":"
Lessee determines the cost of the lease to be $515,000 (sum of the lease payments for the lease term and initial direct costs incurred by Lessee). The annual lease expense to be recognized is therefore $51,500 ($515,000 ÷ 10 years).
","snippet":"Lessee determines the cost of the lease to be $515,000 (sum of the lease payments for the lease term and initial direct costs incurred by Lessee). The annual lease expense to be recognized is therefore $51,500 ($515,000 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f99497a5044a984d388278602df3bc1b4ec64b1a2e84529f8f25dd113fb3938f","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-30","para":"55-30","html":"
At the end of the first year of the lease, the carrying amount of Lessee's lease liability is $362,093 ($342,017 + $20,076), and the carrying amount of the right-of-use asset is $375,593 (the carrying amount of the lease liability plus the remaining initial direct costs, which equal $13,500).
","snippet":"At the end of the first year of the lease, the carrying amount of Lessee's lease liability is $362,093 ($342,017 + $20,076), and the carrying amount of the right-of-use asset is $375,593 (the carrying amount of the lease…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:824138889924a8748c53fa5f97f68a3d9e8d18af82f53ce482ba22f4da65aebf","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-31","para":"55-31","html":"
At the end of Year 6 of the lease, Lessee makes significant leasehold improvements. Those improvements are expected to have significant economic value for Lessee at the end of the original lease term of 10 years. The improvements result in the underlying asset having greater utility to Lessee than alternative assets that could be leased for a similar amount and that are expected to have significant economic life beyond the original lease term. Consequently, construction of the leasehold improvements is deemed a significant event or significant change in circumstances that directly affects whether Lessee is reasonably certain to exercise the option to extend the lease and triggers a reassessment of the lease term. Upon reassessing the lease term, at the end of Year 6, Lessee concludes that it is reasonably certain to exercise the option to extend the lease for five years. Taking into consideration the extended remaining lease term, Lessee's incremental borrowing rate at the end of Year 6 is 7.83 percent. As a result of Lessee's remeasuring the remaining lease term to nine years, Lessee also would remeasure any variable lease payments that depend on an index or a rate; however, in this Example, there are no variable lease payments that depend on an index or a rate. In accordance with paragraph 842-10-25-1, Lessee reassesses the lease classification as a result of the change in the lease term. Assume for purposes of this Example that the reassessment does not change the classification of the lease from that determined at the commencement date.
","snippet":"At the end of Year 6 of the lease, Lessee makes significant leasehold improvements. Those improvements are expected to have significant economic value for Lessee at the end of the original lease term of 10 years. The imp…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0228ece517a36dd6321a10a04689dae9c8941da9e596142c82c71d48a575dcd8","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-32","para":"55-32","html":"
At the end of Year 6, before accounting for the change in the lease term, the lease liability is $183,973 (present value of 4 remaining payments of $50,000, discounted at the rate of 5.87 percent). Lessee's right-of-use asset is $162,807 if the lease is classified as a finance lease or $189,973 if the lease is classified as an operating lease (the balance of the remeasured lease liability at the end of Year 6 plus the remaining initial direct costs of $6,000).
","snippet":"At the end of Year 6, before accounting for the change in the lease term, the lease liability is $183,973 (present value of 4 remaining payments of $50,000, discounted at the rate of 5.87 percent). Lessee's right-of-use …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d29bd6997a5c6d095baf1eb9e6bb8dcf0bead97ee06d0853ad72312584ae95e","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-33","para":"55-33","html":"
Lessee remeasures the lease liability, which is now equal to the present value of 4 payments of $50,000 followed by 5 payments of $55,000, all discounted at the rate of 7.83 percent, which is $355,189. Lessee increases the lease liability by $171,216, representing the difference between the remeasured liability and its current carrying amount ($355,189 - $183,973). The corresponding adjustment is made to the right-of-use asset to reflect the cost of the additional rights.
","snippet":"Lessee remeasures the lease liability, which is now equal to the present value of 4 payments of $50,000 followed by 5 payments of $55,000, all discounted at the rate of 7.83 percent, which is $355,189. Lessee increases t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:43c86eefaebd446b627f07b826455945da9d7ba524e432ce66f6fa9660b68d77","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-34","para":"55-34","html":"
Following the adjustment, the carrying amount of Lessee's right-of-use asset is $334,023 if the lease is a finance lease (that is, $162,807 + $171,216) or $361,189 if the lease is an operating lease (that is, $189,973 + $171,216).
","snippet":"Following the adjustment, the carrying amount of Lessee's right-of-use asset is $334,023 if the lease is a finance lease (that is, $162,807 + $171,216) or $361,189 if the lease is an operating lease (that is, $189,973 + …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d139555f390db3a653999f7422018e3d93e62befa87a49f6fd2d8cff627adbd","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-35","para":"55-35","html":"
Lessee then makes the $50,000 lease payment for Year 7, reducing the lease liability to $305,189 ($355,189 - $50,000), regardless of how the lease is classified.
","snippet":"Lessee then makes the $50,000 lease payment for Year 7, reducing the lease liability to $305,189 ($355,189 - $50,000), regardless of how the lease is classified.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7c9cbd918f4ca5b8a94c01dd559f86dafd76287ec258058ae0778f20f5cc91aa","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-36","para":"55-36","html":"
Lessee recognizes lease expense in Year 7 as follows, depending on how the lease had been classified at the commencement date.
","snippet":"Lessee recognizes lease expense in Year 7 as follows, depending on how the lease had been classified at the commencement date.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71d71b980ec4b4b8fa209aa00895e881f9d7e95097130ed924c5f94e8d38e552","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-37","para":"55-37","html":"
Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset will be amortized on a straight-line basis over the lease term. The lease liability will be reduced in accordance with the interest method. As such, in Year 7 (the first year following the remeasurement), Lessee recognizes amortization expense of $37,114 ($334,023 ÷ 9) and interest expense of $23,896 (7.83% × $305,189).
","snippet":"Lessee depreciates its owned assets on a straight-line basis. Therefore, the right-of-use asset will be amortized on a straight-line basis over the lease term. The lease liability will be reduced in accordance with the i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7f7934449e8d5358d18c7249656237b0c0115a7be22f80dc139baae2daac0540","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-38","para":"55-38","html":"
Lessee determines the remaining cost of the lease as the sum of the following:
  1. a
    The total lease payments, as adjusted for the remeasurement, which is the sum of $500,000 (10 payments of $50,000 during the initial lease term) and $275,000 (5 payments of $55,000 during the term of the lease extension); plus
  2. b
    The total initial direct costs attributable to the lease of $15,000; minus
  3. c
    The periodic lease cost recognized in prior periods of $309,000.
","snippet":"Lessee determines the remaining cost of the lease as the sum of the following:\n(a) The total lease payments, as adjusted for the remeasurement, which is the sum of $500,000 (10 payments of $50,000 during the initial leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7929969aebff4b553b596f463c56e6158a2afbd10f76c58ef7ea4a330cead93a","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-39","para":"55-39","html":"
The amount of the remaining cost of the lease is therefore $481,000 ($775,000 + $15,000 - $309,000). Consequently, Lessee determines that the annual expense to be recognized throughout the remainder of the lease term is $53,444 ($481,000 ÷ the remaining lease term of 9 years).
","snippet":"The amount of the remaining cost of the lease is therefore $481,000 ($775,000 + $15,000 - $309,000). Consequently, Lessee determines that the annual expense to be recognized throughout the remainder of the lease term is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7ed5c8d0c351a6bf16a6a9ed863dd904665ccd254949eb4e94a48661218bddc7","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-40","para":"55-40","html":"
Example 4 illustrates how a lessee would recognize lease cost in an operating lease and initially and subsequently measure right-of-use assets and lease liabilities for that lease.
","snippet":"Example 4 illustrates how a lessee would recognize lease cost in an operating lease and initially and subsequently measure right-of-use assets and lease liabilities for that lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d627d9fda06c9ae7f7eea4578d799a1de720297152c048d5d40ab7be8ed9f9cb","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-41","para":"55-41","html":"
Lessee enters into a 10-year lease for 5,000 square feet of office space. The annual lease payment is $10,000, 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 classifies the lease as an operating lease in accordance with paragraphs
842-10-25-2 through 25-3
. Lessee incurs initial direct costs of $5,000.
","snippet":"Lessee enters into a 10-year lease for 5,000 square feet of office space. The annual lease payment is $10,000, paid in arrears, and increases 5 percent each year during the lease term. Lessee's incremental borrowing rate…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7beffeda87b30a253e77fa9959416fbf993b0ef509115dbfa4942670ef215f67","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-42","para":"55-42","html":"
At the commencement date, Lessee receives a $10,000 cash payment from Lessor that Lessee accounts for as a lease incentive. Lessee measures the lease liability at the present value of the 10 remaining lease payments ($10,000 in Year 1, increasing by 5 percent each year thereafter), discounted at the rate of 6 percent, which is $90,434. Lessee also measures a right-of-use asset of $85,434 (the initial measurement of the lease liability + the initial direct costs of $5,000 - the lease incentive of $10,000).
","snippet":"At the commencement date, Lessee receives a $10,000 cash payment from Lessor that Lessee accounts for as a lease incentive. Lessee measures the lease liability at the present value of the 10 remaining lease payments ($10…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f556ae33c8570ca69eeb7624e3590902c5083f926d6ee721594c90521304901d","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-43","para":"55-43","html":"
During the first year of the lease, Lessee determines the remaining cost of the lease as the sum of the following:
  1. a
    The total lease payments of $115,779 (the sum of the 10 escalating payments to Lessor during the lease term of $125,779 − the lease incentive paid to Lessee at the commencement date of $10,000)
  2. b
    The total initial direct costs attributable to the lease of $5,000.
The amount of the remaining lease cost is therefore $120,779 ($115,779 + $5,000). Consequently, Lessee determines that the single lease cost to be recognized every year throughout the lease term is $12,078 ($120,779 ÷ 10 years). This assumes that there are no remeasurements of the lease liability or modifications to the lease throughout the lease term.
","snippet":"During the first year of the lease, Lessee determines the remaining cost of the lease as the sum of the following:\n(a) The total lease payments of $115,779 (the sum of the 10 escalating payments to Lessor during the leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:603d2927139958615a083b4d0c23f8c47d02a2e3ed9d3362d1fc525ab9e740a7","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-44","para":"55-44","html":"
At the end of Year 1, the carrying amount of the lease liability is $85,860 (9 remaining lease payments, discounted at the rate of 6 percent), and the carrying amount of the right-of-use asset is the amount of the liability, adjusted for the following:
  1. a
    Accrued lease payments of $2,578 (the amount of payments to Lessor to be recognized as part of the single lease cost each year during the lease of $12,578 [total payments to Lessor of $125,779 ÷ 10 years] − the first year's lease payment of $10,000)
  2. b
    Unamortized initial direct costs of $4,500 (gross initial direct costs of $5,000 - amounts recognized previously as part of the single lease cost of $500 [total initial direct costs of $5,000 ÷ 10 years])
  3. c
    The remaining balance of the lease incentive of $9,000 (gross lease incentive of $10,000 - amounts recognized previously as part of the single lease cost of $1,000 [total lease incentives of $10,000 ÷ 10 years]).
Therefore, at the end of Year 1, Lessee measures the right-of-use asset at the amount of $78,782 ($85,860 - $2,578 + $4,500 - $9,000).
","snippet":"At the end of Year 1, the carrying amount of the lease liability is $85,860 (9 remaining lease payments, discounted at the rate of 6 percent), and the carrying amount of the right-of-use asset is the amount of the liabil…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c69ad7ecde579a4c3e2651c685aac35ef1f5e28e8d63171b1c556561e1ee2d1a","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-45","para":"55-45","html":"
At the beginning of Year 2, Lessee determines the remaining cost of the lease to be $108,701 (the total lease payments of $115,779 + the total initial direct costs of $5,000 - the single lease cost recognized in Year 1 of $12,078). The single lease cost to be recognized in Year 2 is still $12,078 ($108,701 ÷ 9 years). For the purposes of the Example, only the first two years' determination of the single lease cost are shown. However, the single lease cost will be determined in the same way as in Years 1 and 2 for the remainder of the lease and, in this Example, will continue to equal $12,078 every period for the remainder of the lease term assuming that there are no remeasurements of the lease liability or modifications to the lease.
","snippet":"At the beginning of Year 2, Lessee determines the remaining cost of the lease to be $108,701 (the total lease payments of $115,779 + the total initial direct costs of $5,000 - the single lease cost recognized in Year 1 o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:75f3bd7d6353ac1633245290821d010b0c20a38aa35045cec0678d772dd61557","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-46","para":"55-46","html":"
At the end of Year 2, the carrying amount of the lease liability is $80,511, and the carrying amount of the right-of-use asset is $71,855 (the carrying amount of the lease liability of $80,511 - the accrued lease payments of $4,656 + the unamortized initial direct costs of $4,000 - the remaining balance of the lease incentive received of $8,000). For the purposes of the Example, the subsequent measurement of the lease liability and the subsequent measurement of the right-of-use asset are shown only for the first two years. However, Lessee will continue to measure the lease liability and the right-of-use asset for this lease in the same manner throughout the remainder of the lease term.
","snippet":"At the end of Year 2, the carrying amount of the lease liability is $80,511, and the carrying amount of the right-of-use asset is $71,855 (the carrying amount of the lease liability of $80,511 - the accrued lease payment…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:379dee8dc917ac4563160377d009b37bb952cf8e88184c3fd648de43cb59e1f0","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-47","para":"55-47","html":"
Example 5 illustrates impairment of a right-of-use asset.
","snippet":"Example 5 illustrates impairment of a right-of-use asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4dbf63c80e16706790fef63ab9da27c235cd45f84bff30a01ebfb4a6fc17674b","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-48","para":"55-48","html":"
Lessee enters into a 10-year lease of a nonspecialized asset. Lease payments are $10,000 per year, payable in arrears. The lease does not transfer ownership of the underlying asset or grant Lessee an option to purchase the underlying asset. At lease commencement, the remaining economic life of the underlying asset is 50 years, and the fair value of the underlying asset is $600,000. Lessee does not incur any initial direct costs as a result of the lease. Lessee's incremental borrowing rate is 7 percent, which reflects the fixed rate at which Lessee could borrow the amount of the lease payments in the same currency, for the same term, and with similar collateral as in the lease at commencement. The lease is classified as an operating lease.
","snippet":"Lessee enters into a 10-year lease of a nonspecialized asset. Lease payments are $10,000 per year, payable in arrears. The lease does not transfer ownership of the underlying asset or grant Lessee an option to purchase t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0cacceb5d3a8d597bbf4d0d4a7a69d4cecc199b77101dd6bff252b7400846a81","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-49","para":"55-49","html":"
At the commencement date, Lessee recognizes the lease liability of $70,236 (the present value of the 10 lease payments of $10,000, discounted at the rate of 7 percent). Lessee also recognizes a right-of-use asset of $70,236 (the initial measurement of the lease liability). Lessee determines the cost of the lease to be $100,000 (the total lease payments for the lease term). The annual lease expense to be recognized is therefore $10,000 ($100,000 ÷ 10 years).
","snippet":"At the commencement date, Lessee recognizes the lease liability of $70,236 (the present value of the 10 lease payments of $10,000, discounted at the rate of 7 percent). Lessee also recognizes a right-of-use asset of $70,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:39cced1fda0f82f050726abdc6440ba1cb2ad75ba7211ea912a49b57ad534517","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-50","para":"55-50","html":"
At the end of Year 3, when the carrying amount of the lease liability and the right-of-use asset are both $53,893, Lessee determines that the right-of-use asset is impaired in accordance with Section 360-10-35 and recognizes an impairment loss of $35,000. The right-of-use asset is part of an asset group that Lessee tested for recoverability because of a significant adverse change in the business climate that affects Lessee's ability to derive benefit from the assets within the asset group. The portion of the total impairment loss for the asset group allocated to the right-of-use asset in accordance with paragraph 360-10-35-28 is $35,000. After the impairment charge, the carrying amount of the right-of-use asset at the end of Year 3 is $18,893 ($53,893 - $35,000). Because of the impairment, the total expense recognized in Year 3 is $45,000 ($10,000 in lease expense + the $35,000 impairment charge). Beginning in Year 4, and for the remainder of the lease term, the single lease cost recognized by Lessee in accordance with paragraphs 842-20-25-6(a) and 842-20-25-7 will equal the sum of the following:
  1. a
    Amortization of the right-of-use asset remaining after the impairment ($18,893 ÷ 7 years = $2,699 per year)
  2. b
    Accretion of the lease liability. For example, in Year 4, the accretion is $3,773 ($53,893 × 7%) and, in Year 5, the accretion is $3,337 ($47,665 × 7%).
","snippet":"At the end of Year 3, when the carrying amount of the lease liability and the right-of-use asset are both $53,893, Lessee determines that the right-of-use asset is impaired in accordance with Section 360-10-35 and recogn…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7974125da56a59dd5f7535b8aa3b7da98eef9edc1e81bc8e4ad670fe89f75b7f","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-51","para":"55-51","html":"
Consequently, at the end of Year 4, the carrying amount of the lease liability is $47,665 (that is, calculated as either the present value of the remaining lease payments, discounted at 7 percent, or the previous balance of $53,893 - $10,000 Year 4 lease payment + the $3,773 accretion of the lease liability). The carrying amount of the right-of-use asset is $16,194 (the previous balance of $18,893 - $2,699 amortization). Lessee measures the lease liability and the right-of-use asset in this manner throughout the remainder of the lease term.
","snippet":"Consequently, at the end of Year 4, the carrying amount of the lease liability is $47,665 (that is, calculated as either the present value of the remaining lease payments, discounted at 7 percent, or the previous balance…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:46ce93e45d23609768c9bb38d18424767f7841507ea3edeea8b57cb26d1169e2","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-52","para":"55-52","html":"
Example 6 illustrates how a lessee may meet the quantitative disclosure requirements in paragraph 842-20-50-4.
","snippet":"Example 6 illustrates how a lessee may meet the quantitative disclosure requirements in paragraph 842-20-50-4.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b6cdda5987051b381ec2cadd91e2bd2ebcd2efe6c8f5c04ed11cb3467e0b7a0b","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}},{"citation":"842-20-55-53","para":"55-53","html":"
The following Example illustrates how a lessee may meet the quantitative disclosure requirements in paragraph 842-20-50-4.
","snippet":"The following Example illustrates how a lessee may meet the quantitative disclosure requirements in paragraph 842-20-50-4.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:006e840b2a37be96896f23d47bf870432bed70171d68ec8c96670857f89ab681","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0d8844eb46903a00604b333610f453df7755b821f20998b2b8fe7620e2fdbd02","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eda07bdf5139429777bd1cd4659302d1e13ee5ce41eac1ca3a13a1825b01952c","downloaded_from":"2026-09-10T01:56:58.743Z","last_downloaded_at":"2026-09-10T01:56:58.743Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479589","source_sha256":"b0af3768b25ee5a3e3b013714fb1236249fe9884530519d6a77f2c0dff7259ac"}}],"enrichment":{"summary":"ASC 842-20 governs how a lessee accounts for leases already classified as finance or operating leases under 842-10. At commencement the lessee recognizes a right-of-use asset and lease liability measured at the present value of unpaid lease payments (842-20-25-1; 30-1); thereafter finance leases produce separate amortization and interest (842-20-25-5), while operating leases produce a single straight-line lease cost (842-20-25-6). It also covers short-term lease policy elections, remeasurement, ROU asset impairment, leasehold improvements, subleases, terminations, and extensive presentation and disclosure requirements.","key_points":["At the commencement date a lessee recognizes a right-of-use asset and a lease liability (842-20-25-1); the liability is the present value of lease payments not yet paid using the rate implicit in the lease if readily determinable, otherwise the incremental borrowing rate (a non-public business entity may elect a risk-free rate by class of underlying asset) (842-20-30-1 through 30-3).","The ROU asset's initial cost equals the lease liability plus prepayments to the lessor less lease incentives received plus initial direct costs (842-20-30-5).","A lessee may elect, by class of underlying asset, not to recognize ROU assets and lease liabilities for short-term leases and instead recognize lease payments straight-line over the lease term (842-20-25-2); the lease ceases to be short term if a change extends the remaining term more than 12 months or a purchase option becomes reasonably certain (842-20-25-3).","For finance leases, the lessee recognizes amortization of the ROU asset plus interest on the liability using a constant periodic discount rate (842-20-25-5; 35-1); for operating leases, the lessee recognizes a single lease cost allocating the remaining cost of the lease (total lease payments plus initial direct costs less cost already recognized) straight-line over the remaining lease term (842-20-25-6(a); 25-8).","Variable lease payments not included in the liability are recognized in the period the obligation is incurred, but are accrued before the target is achieved when achievement is probable and reversed when it becomes probable the target will not be met (842-20-25-5(b); 55-1 through 55-2).","Remeasurement of the lease liability is recorded as an adjustment to the ROU asset (with any excess in profit or loss once the asset is zero), and the discount rate is updated at remeasurement except in the circumstances listed in 842-20-35-5 (842-20-35-4 through 35-5).","ROU assets are tested for impairment under Section 360-10-35; after impairment an operating lease ROU asset is amortized straight-line with separate accretion of the liability (842-20-25-7; 35-9 through 35-10), and leasehold improvements are amortized over the shorter of their useful life and the remaining lease term, with special common-control rules in 842-20-35-12A."],"categories":["Leases","Initial measurement","Subsequent measurement","Disclosure"],"audience_level":"intermediate","student_note":"This is the heart of the lessee model tested on the CPA exam: both lease types put an asset and liability on the balance sheet, and only the income statement pattern differs (front-loaded amortization plus interest for finance leases versus a level single lease cost for operating leases). The most common misunderstanding is thinking an operating lease ROU asset is amortized like a fixed asset — it is instead plugged to the lease liability adjusted for prepaid/accrued rent, unamortized initial direct costs, and remaining lease incentives, unless it has been impaired.","related_topics":["842-10","842-30","842-40","360-10","230-10","850-10"],"key_concepts":["right-of-use asset","lease liability","finance lease","operating lease","single lease cost","short-term lease election","incremental borrowing rate","remeasurement and impairment of rou asset"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df8e09801c4cd3a936a1b3a1ca2d5f440ab511837ab9eca2257b0e569503d880","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-30","title":"Lessor","topic_title":"Leases","score":0.7937,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06766bca51fd34ee3de5d66b9c65a9e1a5230329a4682acd969459b8ae2af591","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-10","title":"Overall","topic_title":"Leases","score":0.782,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:08a00c3677bf4e37f76a44a891c7968b772cdae14b70af1584e311f5cf993c9c","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","score":0.7617,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:70db74c227404cb3d5742b64c36dcecca130dc8ff5e355f098031cdbc669e4d2","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","score":0.7518,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:032a9f4148f972cb214c9ad76d8daab794d0d2978f77ef580b55f9a219b609a3","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","score":0.7516,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ea8f3895a8cb93183465c776ee9ce47aab3356cc34666e922b246244bc062ad6","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"410-20","title":"Asset Retirement Obligations","topic_title":"Asset Retirement and Environmental Obligations","score":0.7157,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4a526df5f47af651a64dc6fc36d7590d0ff088b7baa35ccf4cdcd7c359187fb","downloaded_from":"2026-09-10T00:20:40.400Z","last_downloaded_at":"2026-09-10T00:21:17.061Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-10","title":"Overall","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:195ad140e10c6898f08e27d4a1a70488b19798b59704561bd7a537bc21572006","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-30","title":"Lessor","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72190b2f30acb725ba4deb724c68c45b4105df590acfe74be93ed48c20365c2b","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a61affa44d94b4392810bc01eea292746b0b3f2bf8609a4807e8d0b69278895d","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-30","topic":"842","title":"Lessor","area":"Broad Transactions","paragraphs":99,"summary":"ASC 842-30 governs how lessors account for leases already classified under 842-10 as sales-type, direct financing, or operating leases. For sales-type and direct financing leases the lessor derecognizes the underlying asset and recognizes a net investment in the lease (lease receivable plus unguaranteed residual asset, discounted at the rate implicit in the lease), with selling profit recognized immediately in a sales-type lease but deferred into the net investment in a direct financing lease; interest income then accretes at a constant periodic rate. For operating leases the lessor keeps the asset on its books and recognizes lease payments as income straight-line (or another systematic and rational basis) over the lease term, and a collectibility-not-probable assessment overrides normal recognition in all three models.","concepts":["net investment in the lease","lease receivable","unguaranteed residual asset","selling profit or loss","rate implicit in the lease","collectibility probable assessment","deposit liability","initial direct costs"],"categories":["Leases","Recognition","Subsequent measurement","Disclosure"],"level":"intermediate","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-30-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Commencement Date of the Lease (Commencement Date) Added Accounting Standards Update No. 2016-02 02/25/2016
Contract Added Accounting Standards Update No. 2016-02 02/25/2016
Direct Financing Lease Amended Accounting Standards Update No. 2021-05 07/19/2021
Direct Financing Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Fair Value (2nd def.) Added Accounting Standards Update No. 2016-02 02/25/2016
Finance Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Initial Direct Costs Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Payments Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Receivable Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Term Added Accounting Standards Update No. 2016-02 02/25/2016
Lessee Added Accounting Standards Update No. 2016-02 02/25/2016
Lessor Added Accounting Standards Update No. 2016-02 02/25/2016
Market Participants Added Accounting Standards Update No. 2016-02 02/25/2016
Net Investment in the Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Operating Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Orderly Transaction Added Accounting Standards Update No. 2016-02 02/25/2016
Probable (2nd def.) Added Accounting Standards Update No. 2016-02 02/25/2016
Rate Implicit in the Lease Amended Accounting Standards Update No. 2018-10 07/18/2018
Rate Implicit in the Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Related Parties Added Accounting Standards Update No. 2016-02 02/25/2016
Residual Value Guarantee Added Accounting Standards Update No. 2016-02 02/25/2016
Sales-Type Lease Amended Accounting Standards Update No. 2021-05 07/19/2021
Sales-Type Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Selling Profit or Selling Loss Added Accounting Standards Update No. 2016-02 02/25/2016
Sublease Added Accounting Standards Update No. 2016-02 02/25/2016
Underlying Asset Added Accounting Standards Update No. 2016-02 02/25/2016
Unguaranteed Residual Asset Added Accounting Standards Update No. 2016-02 02/25/2016
Useful Life Added Accounting Standards Update No. 2016-02 02/25/2016
Variable Lease Payments Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-05-1 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-15-1 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-25-1 through 25-14
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-25-2 Amended Accounting Standards Update No. 2016-13 06/16/2016
842-30-25-6 Amended Accounting Standards Update No. 2016-13 06/16/2016
842-30-25-9 Amended Accounting Standards Update No. 2016-13 06/16/2016
842-30-30-1 through 30-4
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-35-1 through 35-7
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-35-3 Amended Accounting Standards Update No. 2018-10 07/18/2018
842-30-35-3 Amended Accounting Standards Update No. 2016-13 06/16/2016
842-30-35-4 Amended Accounting Standards Update No. 2018-10 07/18/2018
842-30-40-1 through 40-4
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-40-2 Amended Accounting Standards Update No. 2016-13 06/16/2016
842-30-45-1 through 45-7
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-45-5 Amended Accounting Standards Update No. 2019-01 03/05/2019
842-30-50-1 through 50-13
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-50-3 Amended Accounting Standards Update No. 2018-11 07/30/2018
842-30-50-3A Added Accounting Standards Update No. 2018-11 07/30/2018
842-30-50-14 Added Accounting Standards Update No. 2018-20 12/10/2018
842-30-55-1 through 55-43
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-30-55-17A Added Accounting Standards Update No. 2019-01 03/05/2019
842-30-55-20 Amended Accounting Standards Update No. 2018-10 07/18/2018
842-30-55-32 Amended Accounting Standards Update No. 2018-10 07/18/2018
842-30-55-32A Added Accounting Standards Update No. 2018-10 07/18/2018
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\nCommencement Date of the Lease (Commencement Date) | Added | Accounting Standards Update No. 201…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df47ab88ad203b1791cc194ab4363266703ecb74ec21ef0ee4c51fcdf45c56b5","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:05.183Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479791","source_sha256":"619a45e27d7198995f5dfcce3f90683ffe38e0b0a628c8c70c5b29e9d12ca74b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:424dc588c8ffcb2b4f5a2e852acf6623ca960ed4de39d909c9b378bbc88b6fab","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:05.183Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479791","source_sha256":"619a45e27d7198995f5dfcce3f90683ffe38e0b0a628c8c70c5b29e9d12ca74b"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9332fb7934ff5fc9f8083aef7257cd1f3157689653d144ecfef6659c02ba660b","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:05.183Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479791","source_sha256":"619a45e27d7198995f5dfcce3f90683ffe38e0b0a628c8c70c5b29e9d12ca74b"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-30-05-1","para":"05-1","html":"
This Subtopic addresses accounting by lessors for leases that have been classified as sales-type leases, direct financing leases, or operating leases in accordance with the requirements in Subtopic 842-10. Lessors should follow the requirements in this Subtopic as well as those in Subtopic 842-10.
","snippet":"This Subtopic addresses accounting by lessors for leases that have been classified as sales-type leases, direct financing leases, or operating leases in accordance with the requirements in Subtopic 842-10. Lessors should…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:83a92dc3b8392c8cd0b2920e0124599330ff1c513dfeae9eff97a506424df901","downloaded_from":"2026-09-10T01:57:08.661Z","last_downloaded_at":"2026-09-10T01:57:08.661Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479670","source_sha256":"e807fb92727752126cc3047fc9337b093ea7af87ff60615edbd05cc511dad126"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:218ec47ef2ed7ac90afb6b5c82a9c3e95c531309d5bb4713a3058dbd6723dfe2","downloaded_from":"2026-09-10T01:57:08.661Z","last_downloaded_at":"2026-09-10T01:57:08.661Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479670","source_sha256":"e807fb92727752126cc3047fc9337b093ea7af87ff60615edbd05cc511dad126"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:afde6639c10939d3ca4871ddc27e0f695165280bf881f7b51850d6a0fff9636f","downloaded_from":"2026-09-10T01:57:08.661Z","last_downloaded_at":"2026-09-10T01:57:08.661Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479670","source_sha256":"e807fb92727752126cc3047fc9337b093ea7af87ff60615edbd05cc511dad126"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-30-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 842-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 842-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b374b43a5270f44b475c35796ba3b5a2d9f2ec7846501995475670f2469e95e","downloaded_from":"2026-09-10T01:57:10.893Z","last_downloaded_at":"2026-09-10T01:57:10.893Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479558","source_sha256":"5b9e2e67c86f30be845e9f8f8efc27f56bada4aa24df213ab06ce63b8595becd"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9236cc26febbfb1ef3a7efea894e3214dc37f9ff9658f1c424529612856d55ce","downloaded_from":"2026-09-10T01:57:10.893Z","last_downloaded_at":"2026-09-10T01:57:10.893Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479558","source_sha256":"5b9e2e67c86f30be845e9f8f8efc27f56bada4aa24df213ab06ce63b8595becd"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:061ad40ad4046a5689182bd4071403bb458eb9fe0df11a0711f7b000773cec63","downloaded_from":"2026-09-10T01:57:10.893Z","last_downloaded_at":"2026-09-10T01:57:10.893Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479558","source_sha256":"5b9e2e67c86f30be845e9f8f8efc27f56bada4aa24df213ab06ce63b8595becd"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type Leases","paragraphs":[{"citation":"842-30-25-1","para":"25-1","html":"
At the commencement date, a lessor shall recognize each of the following and derecognize the underlying asset in accordance with paragraph 842-30-40-1:
  1. a
    A net investment in the lease, measured in accordance with paragraph 842-30-30-1
  2. b
    Selling profit or selling loss arising from the lease
  3. c
    Initial direct costs as an expense if, at the commencement date, the fair value of the underlying asset is different from its carrying amount. If the fair value of the underlying asset equals its carrying amount, initial direct costs (see paragraphs
    842-10-30-9 through 30-10
    ) are deferred at the commencement date and included in the measurement of the net investment in the lease. The rate implicit in the lease is defined in such a way that those initial direct costs eligible for deferral are included automatically in the net investment in the lease; there is no need to add them separately.
","snippet":"At the commencement date, a lessor shall recognize each of the following and derecognize the underlying asset in accordance with paragraph 842-30-40-1:\n(a) A net investment in the lease, measured in accordance with parag…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0005268baf2a54e73511e0584f506fd9e6ba2f6cddad050931a0ab5a1604879","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-2","para":"25-2","html":"
After the commencement date, a lessor shall recognize all of the following:
  1. a
    Interest income on the net investment in the lease, measured in accordance with paragraph 842-30-35-1(a)
  2. b
    Variable lease payments that are not included in the net investment in the lease as income in profit or loss in the period when the changes in facts and circumstances on which the variable lease payments are based occur
  3. c
    Credit losses on the net investment in the lease (as described in paragraph 842-30-35-3).
","snippet":"After the commencement date, a lessor shall recognize all of the following:\n(a) Interest income on the net investment in the lease, measured in accordance with paragraph 842-30-35-1(a)\n(b) Variable lease payments that ar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:30b9d42145d91288f26650a62ff7ad6281e1d6df16972e1ad11b99cf2c113ef5","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-3","para":"25-3","html":"
The guidance in paragraphs
842-30-25-1 through 25-2
notwithstanding, if collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, is not probable at the commencement date, the lessor shall not derecognize the underlying asset but shall recognize lease payments received—including variable lease payments—as a deposit liability until the earlier of either of the following:
  1. a
    Collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, becomes probable. If collectibility is not probable at the commencement date, a lessor shall continue to assess collectibility to determine whether the lease payments and any amount necessary to satisfy a residual value guarantee are probable of collection.
  2. b
    Either of the following events occurs:
    1. 1
      The contract has been terminated, and the lease payments received from the lessee are nonrefundable.
    2. 2
      The lessor has repossessed the underlying asset, it has no further obligation under the contract to the lessee, and the lease payments received from the lessee are nonrefundable.
","snippet":"The guidance in paragraphs 842-30-25-1 through 25-2 notwithstanding, if collectibility of the lease payments, plus any amount necessary to satisfy a residual value guarantee provided by the lessee, is not probable at the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9167c5db3343a6ff06c3490f1868437a97860e7805d6435e5a9c50985be56d6","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-4","para":"25-4","html":"
When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(a) is met (that is, the date at which collectibility of the lease payments plus any amount necessary to satisfy a residual value guarantee provided by the lessee is assessed as probable), the lessor shall do all of the following:
  1. a
    Derecognize the carrying amount of the underlying asset
  2. b
    Derecognize the carrying amount of any deposit liability recognized in accordance with paragraph 842-30-25-3
  3. c
    Recognize a net investment in the lease on the basis of the remaining lease payments and remaining lease term, using the rate implicit in the lease determined at the commencement date
  4. d
    Recognize selling profit or selling loss calculated as:
    1. 1
      The lease receivable; plus
    2. 2
      The carrying amount of the deposit liability; minus
    3. 3
      The carrying amount of the underlying asset, net of the unguaranteed residual asset.
","snippet":"When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(a) is met (that is, the date at which collectibility of the lease payments plus any amount necessary to sat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5df04e7f5ca20f9fed9938ddf3564a3bda0540b8a1bfdbcbb8776d76400f158","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-5","para":"25-5","html":"
When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(b) is met, the lessor shall derecognize the carrying amount of any deposit liability recognized in accordance with paragraph 842-30-25-3, with the corresponding amount recognized as lease income.
","snippet":"When collectibility is not probable at the commencement date, at the date the criterion in paragraph 842-30-25-3(b) is met, the lessor shall derecognize the carrying amount of any deposit liability recognized in accordan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b5c1fe1c6b5b80a2e280031bdc6e1e193d6d0488873b7be5b9f3b30d27b23b3","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-6","para":"25-6","html":"
If collectibility is probable at the commencement date for a sales-type lease or for a direct financing lease, a lessor shall not reassess whether collectibility is probable. Subsequent changes in the credit risk of the lessee shall be accounted for in accordance with the credit loss guidance applicable to the net investment in the lease in paragraph 842-30-35-3.
","snippet":"If collectibility is probable at the commencement date for a sales-type lease or for a direct financing lease, a lessor shall not reassess whether collectibility is probable. Subsequent changes in the credit risk of the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf981b2c2ed4eaa9ea52a7edeca30fba49b35647ad596b799498aaf3188dd7d1","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:327165edd92283c6b2e55ae4cbd2286f34b0d7a0cf8036bcd9d13ddc884d5468","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"block":null,"heading":"Direct Financing Leases","paragraphs":[{"citation":"842-30-25-7","para":"25-7","html":"
At the commencement date, a lessor shall recognize both of the following and derecognize the underlying asset in accordance with paragraph 842-30-40-1:
  1. a
    A net investment in the lease, measured in accordance with paragraph 842-30-30-2
  2. b
    Selling loss arising from the lease, if applicable.
","snippet":"At the commencement date, a lessor shall recognize both of the following and derecognize the underlying asset in accordance with paragraph 842-30-40-1:\n(a) A net investment in the lease, measured in accordance with parag…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:679c394e5a76d23bd8d704fbd06b56401945cdb5f0d55e279b56f3b5c67bb8fc","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-8","para":"25-8","html":"
Selling profit and initial direct costs (see paragraphs
842-10-30-9 through 30-10
) are deferred at the commencement date and included in the measurement of the net investment in the lease. The rate implicit in the lease is defined in such a way that initial direct costs deferred in accordance with this paragraph are included automatically in the net investment in the lease; there is no need to add them separately.
","snippet":"Selling profit and initial direct costs (see paragraphs 842-10-30-9 through 30-10) are deferred at the commencement date and included in the measurement of the net investment in the lease. The rate implicit in the lease …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dc5709d56cc344ed7e84df89044e2c450e531a10d0a990af8c9ded85bf3b7339","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-9","para":"25-9","html":"
After the commencement date, a lessor shall recognize all of the following:
  1. a
    Interest income on the net investment in the lease, measured in accordance with paragraph 842-30-35-1(a)
  2. b
    Variable lease payments that are not included in the net investment in the lease as income in profit or loss in the period when the changes in facts and circumstances on which the variable lease payments are based occur
  3. c
    Credit losses on the net investment in the lease (as described in paragraph 842-30-35-3).
","snippet":"After the commencement date, a lessor shall recognize all of the following:\n(a) Interest income on the net investment in the lease, measured in accordance with paragraph 842-30-35-1(a)\n(b) Variable lease payments that ar…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2c7d4c939c7fb9f58546ad238f227ef347ee00af4e7384e3bc7c4accc448dbeb","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cff1c768cc7b8162602ad7cc094692d5f2af3b493f38b685745174225cee9dae","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-25-10","para":"25-10","html":"
At the commencement date, a lessor shall defer initial direct costs.
","snippet":"At the commencement date, a lessor shall defer initial direct costs.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a585f14cbe0628fafaf182a7cf890e8ec8b57fa2fa816091ea01f9f3b3deccd5","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-11","para":"25-11","html":"
After the commencement date, a lessor shall recognize all of the following:
  1. a
    The lease payments as income in profit or loss over the lease term on a straight-line basis unless another systematic and rational basis is more representative of the pattern in which benefit is expected to be derived from the use of the underlying asset, subject to paragraph 842-30-25-12
  2. b
    Variable lease payments as income in profit or loss in the period in which the changes in facts and circumstances on which the variable lease payments are based occur
  3. c
    Initial direct costs as an expense over the lease term on the same basis as lease income (as described in (a)).
","snippet":"After the commencement date, a lessor shall recognize all of the following:\n(a) The lease payments as income in profit or loss over the lease term on a straight-line basis unless another systematic and rational basis is …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e1198e9aeb733fd963bc9f2cf868c7daaf8e5919e1284d3686cb8ab3ac3216a","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-12","para":"25-12","html":"
If collectibility of the lease payments plus any amount necessary to satisfy a residual value guarantee (provided by the lessee or any other unrelated third party) is not probable at the commencement date, lease income shall be limited to the lesser of the income that would be recognized in accordance with paragraph 842-30-25-11(a) through (b) or the lease payments, including variable lease payments, that have been collected from the lessee.
","snippet":"If collectibility of the lease payments plus any amount necessary to satisfy a residual value guarantee (provided by the lessee or any other unrelated third party) is not probable at the commencement date, lease income s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8da8263f8586ef298a519084602d0796ca84d3a273e710a43fcf0ef9d9938a38","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-13","para":"25-13","html":"
If the assessment of collectibility changes after the commencement date, any difference between the lease income that would have been recognized in accordance with paragraph 842-30-25-11(a) through (b) and the lease payments, including variable lease payments, that have been collected from the lessee shall be recognized as a current-period adjustment to lease income.
","snippet":"If the assessment of collectibility changes after the commencement date, any difference between the lease income that would have been recognized in accordance with paragraph 842-30-25-11(a) through (b) and the lease paym…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e68488c411ce898c60db4390ff88cbdeded67e83f8fe86e7f71193758b8049d1","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"citation":"842-30-25-14","para":"25-14","html":"
See Example 1 (paragraphs
842-30-55-18 through 55-43
) for an illustration of the requirements when collectibility is not probable.
","snippet":"See Example 1 (paragraphs 842-30-55-18 through 55-43) for an illustration of the requirements when collectibility is not probable.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d79ab7aabe69c6844d9eef26073858e7a842b3ad69ba3086c3473a62c8d09de","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:612cdb45082b2e22b4d5f9e2d2c59fac293027e45d96ae99a24144ae57c8fc38","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:10ee5c2336028bcc1a0125cc2892596ad2bc39d3b30b7788f66ab1920c4962d9","downloaded_from":"2026-09-10T01:57:15.916Z","last_downloaded_at":"2026-09-10T01:57:15.916Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479341","source_sha256":"b44663d4901d4f29bab1008cc7e852ca5a52b4cc97da4a5dbeccf40d30437588"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-30-1","para":"30-1","html":"
At the commencement date, for a sales-type lease, a lessor shall measure the net investment in the lease to include both of the following:
  1. a
    The lease receivable, which is measured at the present value, discounted using the rate implicit in the lease, of:
    1. 1
      The lease payments (as described in paragraph 842-10-30-5) not yet received by the lessor
    2. 2
      The amount the lessor expects to derive from the underlying asset following the end of the lease term that is guaranteed by the lessee or any other third party unrelated to the lessor
  2. b
    The unguaranteed residual asset at the present value of the amount the lessor expects to derive from the underlying asset following the end of the lease term that is not guaranteed by the lessee or any other third party unrelated to the lessor, discounted using the rate implicit in the lease.
","snippet":"At the commencement date, for a sales-type lease, a lessor shall measure the net investment in the lease to include both of the following:\n(a) The lease receivable, which is measured at the present value, discounted usin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:325ad66519be2348c75494e5ab244db51b86e3152f858acddf034c27e8f847ea","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"citation":"842-30-30-2","para":"30-2","html":"
At the commencement date, for a direct financing lease, a lessor shall measure the net investment in the lease to include the items in paragraph 842-30-30-1(a) through (b), reduced by the amount of any selling profit.
","snippet":"At the commencement date, for a direct financing lease, a lessor shall measure the net investment in the lease to include the items in paragraph 842-30-30-1(a) through (b), reduced by the amount of any selling profit.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e31631db101543fdd17f2a073e5c83542078bbea8bbaca65c45830d59d29b79","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"citation":"842-30-30-3","para":"30-3","html":"
See Example 1 (paragraphs
842-30-55-18 through 55-43
) for an illustration of the requirements for sales-type and direct financing leases.
","snippet":"See Example 1 (paragraphs 842-30-55-18 through 55-43) for an illustration of the requirements for sales-type and direct financing leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:99b3f89555d539a04977dff8618d97b40822b2bafea1fe136ffaa059a0e03494","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06e44e8f75a94117f1048f1756f296e5e1d8765f94a3d03aa4831ba6a922094d","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-30-4","para":"30-4","html":"
A lessor shall continue to measure the underlying asset subject to an operating lease in accordance with other Topics.
","snippet":"A lessor shall continue to measure the underlying asset subject to an operating lease in accordance with other Topics.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bbefe51b918369829d02c0b3f777eb233afb68ec1818f319968978cc15298e46","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3ee5c1a7f0d0babdfb0cf016d242273f6cb63787f9854fdc8eb0eaa9af96b1b7","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:afa93cdb7c709be1d252d885e5d344a37cd15927c2f0e633e387b058ccf22756","downloaded_from":"2026-09-10T01:57:17.907Z","last_downloaded_at":"2026-09-10T01:57:17.907Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479244","source_sha256":"212cedb6ed38e5d7271a8940e8a8e08dbc0ca983ae6991fa5b81765d4da7097f"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-35-1","para":"35-1","html":"
After the commencement date, a lessor shall measure the net investment in the lease by doing both of the following:
  1. a
    Increasing the carrying amount to reflect the interest income on the net investment in the lease. A lessor shall determine the interest income on the net investment in the lease in each period during the lease term as the amount that produces a constant periodic discount rate on the remaining balance of the net investment in the lease.
  2. b
    Reducing the carrying amount to reflect the lease payments collected during the period.
","snippet":"After the commencement date, a lessor shall measure the net investment in the lease by doing both of the following:\n(a) Increasing the carrying amount to reflect the interest income on the net investment in the lease. A …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2526c2e49e3cc1cc6532240ed643454248a49a2f278badec6997bb1c398c3210","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"citation":"842-30-35-2","para":"35-2","html":"
After the commencement date, a lessor shall not remeasure the net investment in the lease unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10-25-8.
","snippet":"After the commencement date, a lessor shall not remeasure the net investment in the lease unless the lease is modified and that modification is not accounted for as a separate contract in accordance with paragraph 842-10…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:664a2588399d84e5cf5148832b86652782dd941d352e7f5763452dcd37a77e86","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"citation":"842-30-35-3","para":"35-3","html":"
A lessor shall determine the loss allowance related to the net investment in the lease and shall record any loss allowance in accordance with Subtopic 326-20 on financial instruments measured at amortized cost. When determining the loss allowance for a net investment in the lease, a lessor shall take into consideration the collateral relating to the net investment in the lease. The collateral relating to the net investment in the lease represents the cash flows that the lessor would expect to receive (or derive) from the lease receivable and the unguaranteed residual asset during and following the end of the remaining lease term.
","snippet":"A lessor shall determine the loss allowance related to the net investment in the lease and shall record any loss allowance in accordance with Subtopic 326-20 on financial instruments measured at amortized cost. When dete…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a16acf3a9c7de0350271200fe4576baae338bd8df5d55a0ae09c88ccee4499f7","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"citation":"842-30-35-4","para":"35-4","html":"
If a lessor sells substantially all of the lease receivable associated with a sales-type lease or a direct financing lease and retains an interest in the unguaranteed residual asset, the lessor shall not continue to accrete the unguaranteed residual asset to its estimated value over the remaining lease term. The lessor shall report any remaining unguaranteed residual asset thereafter at its carrying amount at the date of the sale of the lease receivable and apply Topic 360 on property, plant, and equipment to determine whether the unguaranteed residual asset is impaired.
","snippet":"If a lessor sells substantially all of the lease receivable associated with a sales-type lease or a direct financing lease and retains an interest in the unguaranteed residual asset, the lessor shall not continue to accr…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5f355000002d442b54189a5646c97fbac9dff290a986e188b3c52e7cd2be2a62","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"citation":"842-30-35-5","para":"35-5","html":"
At the end of the lease term, a lessor shall reclassify the net investment in the lease to the appropriate category of asset (for example, property, plant, and equipment) in accordance with other Topics, measured at the carrying amount of the net investment in the lease. The lessor shall account for the underlying asset that was the subject of a lease in accordance with other Topics.
","snippet":"At the end of the lease term, a lessor shall reclassify the net investment in the lease to the appropriate category of asset (for example, property, plant, and equipment) in accordance with other Topics, measured at the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:15de3493ae9ea102d32efd72cb96938376629be670f80247933e7bffe5f39732","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a3e195d8cd89f48730cebc3611996bb99c98630e906bb63b3b7021f72676be8f","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-35-6","para":"35-6","html":"
A lessor shall continue to measure, including testing for impairment in accordance with Section 360-10-35 on impairment or disposal of long-lived assets, the underlying asset subject to an operating lease in accordance with other Topics.
","snippet":"A lessor shall continue to measure, including testing for impairment in accordance with Section 360-10-35 on impairment or disposal of long-lived assets, the underlying asset subject to an operating lease in accordance w…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c9d35c69025e6fcf716ee5adaf3abc4f4f5d97caca1545af4e41ab25652e5ef3","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b02fbbdc1d4289a4ad966007ed05800011d4f05ee2ff2ca03b2d014f105ff61e","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"block":null,"heading":"Subleases","paragraphs":[{"citation":"842-30-35-7","para":"35-7","html":"
If the original lessee enters into a sublease or the original lease agreement is sold or transferred by the original lessee to a third party, the original lessor shall continue to account for the lease as it did before.
","snippet":"If the original lessee enters into a sublease or the original lease agreement is sold or transferred by the original lessee to a third party, the original lessor shall continue to account for the lease as it did before.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2956b0091f3968d1c46481c080473b1ebed4c7fbdd99e547b5afa92eab4be35e","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0256cafdf17077828767a203fa6f6997ae79d8f7e6f79f3f93762ad0af269a2c","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:697bdf6c49be46ab0410979710b735b95a97e3eed7ea8dafedf1211aafd875b6","downloaded_from":"2026-09-10T01:57:19.752Z","last_downloaded_at":"2026-09-10T01:57:19.752Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479139","source_sha256":"bda6fce440d7543d9b17a308004096ec418b02711705330976f147f3e49e4a30"}},{"number":"40","label":"40 Derecognition","anchor":"40-derecognition","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-40-1","para":"40-1","html":"
At the commencement date, a lessor shall derecognize the carrying amount of the underlying asset (if previously recognized) unless the lease is a sales-type lease and collectibility of the lease payments is not probable (see paragraph 842-30-25-3).
","snippet":"At the commencement date, a lessor shall derecognize the carrying amount of the underlying asset (if previously recognized) unless the lease is a sales-type lease and collectibility of the lease payments is not probable …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9201e60ff843034e0bbc9710374955d699c42006233540a8c99ddf3a2f9f93d7","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}},{"citation":"842-30-40-2","para":"40-2","html":"
If a sales-type lease or a direct financing lease is terminated before the end of the lease term, a lessor shall do all of the following:
  1. a
    Measure the net investment in the lease for credit losses in accordance with Subtopic 326-20 on financial instruments measured at amortized cost and record any credit loss identified
  2. b
    Reclassify the net investment in the lease to the appropriate category of asset in accordance with other Topics, measured at the sum of the carrying amounts of the lease receivable (less any amounts still expected to be received by the lessor) and the residual asset
  3. c
    Account for the underlying asset that was the subject of the lease in accordance with other Topics.
","snippet":"If a sales-type lease or a direct financing lease is terminated before the end of the lease term, a lessor shall do all of the following:\n(a) Measure the net investment in the lease for credit losses in accordance with S…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9fe379c8a5de3b1a7aa3f66e441e0a8a5859eaea4c160b1ad41d009021c5cbd9","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}},{"citation":"842-30-40-3","para":"40-3","html":"
If the original lease agreement is replaced by a new agreement with a new lessee, the lessor shall account for the termination of the original lease as provided in paragraph 842-30-40-2 and shall classify and account for the new lease as a separate transaction.
","snippet":"If the original lease agreement is replaced by a new agreement with a new lessee, the lessor shall account for the termination of the original lease as provided in paragraph 842-30-40-2 and shall classify and account for…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7bac69d76a58563924ff714d932b82c61272d960bf92681756b97291f4380946","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}},{"citation":"842-30-40-4","para":"40-4","html":"
For guidance on the acquisition of the residual value of an underlying asset by a third party, see paragraph 360-10-25-2.
","snippet":"For guidance on the acquisition of the residual value of an underlying asset by a third party, see paragraph 360-10-25-2.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f67db80ef1135fd02adaef51905d1ce7ee2bf2db880c236bd326bb4a1d8b6636","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fa5d4fa45b7d2c1fd697187c647fd866099402f87204abe318949da19e405a2e","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90b84d1ec383120a1e6abc593d0bd050c2f711ffe35229ad7ca8d1322f8eb7e8","downloaded_from":"2026-09-10T01:57:23.301Z","last_downloaded_at":"2026-09-10T01:57:23.301Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479066","source_sha256":"9473a1995704682b2c81735b1969b4fd43d0a38157c51ca07a519d5292115716"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-45-1","para":"45-1","html":"
A lessor shall present lease assets (that is, the aggregate of the lessor's net investment in sales-type leases and direct financing leases) separately from other assets in the statement of financial position.
","snippet":"A lessor shall present lease assets (that is, the aggregate of the lessor's net investment in sales-type leases and direct financing leases) separately from other assets in the statement of financial position.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0d2f1ce3e9a028b576183c2f8a3d8036c7ee9881cf4f836c08f052d2343a0b3","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"citation":"842-30-45-2","para":"45-2","html":"
Lease assets shall be subject to the same considerations as other assets in classification as current or noncurrent assets in a classified balance sheet.
","snippet":"Lease assets shall be subject to the same considerations as other assets in classification as current or noncurrent assets in a classified balance sheet.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4b414c1db85eb45cc88218313f309c68e1a6c0d84b1640ea650461a6f76f5a28","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"citation":"842-30-45-3","para":"45-3","html":"
A lessor shall either present in the statement of comprehensive income or disclose in the notes income arising from leases. If a lessor does not separately present lease income in the statement of comprehensive income, the lessor shall disclose which line items include lease income in the statement of comprehensive income.
","snippet":"A lessor shall either present in the statement of comprehensive income or disclose in the notes income arising from leases. If a lessor does not separately present lease income in the statement of comprehensive income, t…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c47b23efe1fc244708960bde7c13dd22f6fe5ccf6304920c44989b1a4137ac05","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"citation":"842-30-45-4","para":"45-4","html":"
A lessor shall present any profit or loss on the lease recognized at the commencement date in a manner that best reflects the lessor's business model(s). Examples of presentation include the following:
  1. a
    If a lessor uses leases as an alternative means of realizing value from the goods that it would otherwise sell, the lessor shall present revenue and cost of goods sold relating to its leasing activities in separate line items so that income and expenses from sold and leased items are presented consistently. Revenue recognized is the lesser of:
    1. 1
      The fair value of the underlying asset at the commencement date
    2. 2
      The sum of the lease receivable and any lease payments prepaid by the lessee.
    Cost of goods sold is the carrying amount of the underlying asset at the commencement date minus the unguaranteed residual asset.
  2. b
    If a lessor uses leases for the purposes of providing finance, the lessor shall present the profit or loss in a single line item.
","snippet":"A lessor shall present any profit or loss on the lease recognized at the commencement date in a manner that best reflects the lessor's business model(s). Examples of presentation include the following:\n(a) If a lessor us…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:108f7aa93df2dd682b86e3fd82b8edf993d623d69ce1824ba487859d64faf5a4","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"citation":"842-30-45-5","para":"45-5","html":"
In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities. However, if the lessor is within the scope of Topic 942 on financial services—depository and lending, it shall follow the guidance in paragraph 942-230-45-4 for the presentation of principal payments received from leases.
","snippet":"In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities. However, if the lessor is within the scope of Topic 942 on financial services—depository and lending, it shal…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:077397d8a509ce286b6dbbc27523ba6f26c188e5d1d08d0ed4a3637d20c817a0","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:01c504b000021426512f23b8d7d4663cf34ac2633bc1a83d7549f96c4ad879f5","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-45-6","para":"45-6","html":"
A lessor shall present the underlying asset subject to an operating lease in accordance with other Topics.
","snippet":"A lessor shall present the underlying asset subject to an operating lease in accordance with other Topics.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c84ea8047f1d0bec0e775f1baad7cf678785482780ad6158d7be271ccb8d3e2e","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"citation":"842-30-45-7","para":"45-7","html":"
In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities.
","snippet":"In the statement of cash flows, a lessor shall classify cash receipts from leases within operating activities.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:55508a5c923d05748cf9dc1a4c423383c883b3dc47866aa2c602b425feeb1efb","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:26d507d6fa8f1f60fb9e92706741e62e8a0446b3ceb5a492834ec31c4c366c33","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d8d7a65c63f608461ba7d9b696c2cbc0655f1dbcb1a8470e8ea902176f052795","downloaded_from":"2026-09-10T01:57:26.511Z","last_downloaded_at":"2026-09-10T01:57:26.511Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479016","source_sha256":"32cea9e1a8a5512cb610ae5e4dbbb10c090f8f5fa8a084b37d1865c75a22b94f"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-30-50-1","para":"50-1","html":"
The objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. To achieve that objective, a lessor shall disclose qualitative and quantitative information about all of the following:
  1. a
    Its leases (as described in paragraphs 842-30-50-3(a), 842-30-50-4, and 842-30-50-7)
  2. b
    The significant judgments made in applying the requirements in this Topic to those leases (as described in paragraph 842-30-50-3(b))
  3. c
    The amounts recognized in the financial statements relating to those leases (as described in paragraphs
    842-30-50-5 through 50-6
    and
    842-30-50-8 through 50-13
    ).
","snippet":"The objective of the disclosure requirements is to enable users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. To achieve that objective, a lessor shall disclose …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cd0ca2dcdba9aa1296775c9574284c162b93f047375247c622feacb0f3f77d24","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-2","para":"50-2","html":"
A lessor shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. A lessor shall aggregate or disaggregate disclosures so that useful information is not obscured by including a large amount of insignificant detail or by aggregating items that have different characteristics.
","snippet":"A lessor shall consider the level of detail necessary to satisfy the disclosure objective and how much emphasis to place on each of the various requirements. A lessor shall aggregate or disaggregate disclosures so that u…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e5dc9fb2442e748eeec81c01cf36d39d260ede15cfd12256081749d2ad106676","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-3","para":"50-3","html":"
A lessor shall disclose both of the following:
  1. a
    Information about the nature of its leases, including:
    1. 1
      A general description of those leases
    2. 2
      The basis and terms and conditions on which variable lease payments are determined
    3. 3
      The existence and terms and conditions of options to extend or terminate the lease
    4. 4
      The existence and terms and conditions of options for a lessee to purchase the underlying asset.
  2. b
    Information about significant assumptions and judgments made in applying the requirements of this Topic, which may include the following:
    1. 1
      The determination of whether a contract contains a lease (as described in paragraphs
      842-10-15-2 through 15-27
      )
    2. 2
      The allocation of the consideration in a contract between lease and nonlease components (as described in paragraphs
      842-10-15-28 through 15-32
      ),       unless a lessor elects the practical expedient in paragraph 842-10-15-42A and all nonlease components in the contract qualify for that practical expedient
    3. 3
      The determination of the amount the lessor expects to derive from the underlying asset following the end of the lease term.
","snippet":"A lessor shall disclose both of the following:\n(a) Information about the nature of its leases, including:\n(1) A general description of those leases\n(2) The basis and terms and conditions on which variable lease payments …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa48e9610ad6010b3ee3c9aef88ee51bd5457125f3250f278894df8220e1c7dc","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-3A","para":"50-3A","html":"
An entity that elects the practical expedient in paragraph 842-10-15-42A on not separating nonlease components from associated lease components (including an entity that accounts for the combined component entirely in Topic 606 on revenue from contracts with customers) shall disclose the following, by class of underlying asset:
  1. a
    Its accounting policy election and the class or classes of underlying assets for which it has elected to apply the practical expedient
  2. b
    The nature of:
    1. 1
      The lease components and nonlease components combined as a result of applying the practical expedient
    2. 2
      The nonlease components, if any, that are accounted for separately from the combined component because they do not qualify for the practical expedient
  3. c
    The Topic the entity applies to the combined component (this Topic or Topic 606).
","snippet":"An entity that elects the practical expedient in paragraph 842-10-15-42A on not separating nonlease components from associated lease components (including an entity that accounts for the combined component entirely in To…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:73152543b452ad8319bf5be328c6083320b3b929068f191f717c6705cea38a88","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-4","para":"50-4","html":"
A lessor shall disclose any lease transactions between related parties (see Topic 850 on related party disclosures).
","snippet":"A lessor shall disclose any lease transactions between related parties (see Topic 850 on related party disclosures).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:89b9f0b4a089724aa02a2e81108abf5c3d23c9478d2234efe44b580a1f65f816","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-5","para":"50-5","html":"
A lessor shall disclose lease income recognized in each annual and interim reporting period, in a tabular format, to include the following:
  1. a
    For sales-type leases and direct financing leases:
    1. 1
      Profit or loss recognized at the commencement date (disclosed on a gross basis or a net basis consistent with paragraph 842-30-45-4)
    2. 2
      Interest income either in aggregate or separated by components of the net investment in the lease.
  2. b
    For operating leases, lease income relating to lease payments.
  3. c
    Lease income relating to variable lease payments not included in the measurement of the lease receivable.
","snippet":"A lessor shall disclose lease income recognized in each annual and interim reporting period, in a tabular format, to include the following:\n(a) For sales-type leases and direct financing leases:\n(1) Profit or loss recogn…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1ad1027c46eb00122c0e1372ee4c6a908a749d46ab140afc1ae2af43f4a615d6","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-6","para":"50-6","html":"
A lessor shall disclose in the notes the components of its aggregate net investment in sales-type and direct financing leases (that is, the carrying amount of its lease receivables, its unguaranteed residual assets, and any deferred selling profit on direct financing leases).
","snippet":"A lessor shall disclose in the notes the components of its aggregate net investment in sales-type and direct financing leases (that is, the carrying amount of its lease receivables, its unguaranteed residual assets, and …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a6755ec0c510daa73422e141c3572a17cf0c9078929f711b0b37dd55ac343b4d","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-7","para":"50-7","html":"
A lessor shall disclose information about how it manages its risk associated with the residual value of its leased assets. In particular, a lessor should disclose all of the following:
  1. a
    Its risk management strategy for residual assets
  2. b
    The carrying amount of residual assets covered by residual value guarantees (excluding guarantees considered to be lease payments for the lessor, as described in paragraph 842-30-30-1(a)(2))
  3. c
    Any other means by which the lessor reduces its residual asset risk (for example, buyback agreements or variable lease payments for use in excess of specified limits).
","snippet":"A lessor shall disclose information about how it manages its risk associated with the residual value of its leased assets. In particular, a lessor should disclose all of the following:\n(a) Its risk management strategy fo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ca2b0908dbe7c3172ad1fb43a8e196c2c4c2eeafe9b5c86104e578e890595eee","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d97304cfd5c50f5238b7090614444fd63a2e1cd56fa3eaba55f0cb35366618a8","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"block":null,"heading":"Sales-Type and Direct Financing Leases","paragraphs":[{"citation":"842-30-50-8","para":"50-8","html":"
In addition to the disclosures required by paragraphs
842-30-50-3 through 50-7
, a lessor also shall provide the disclosures in paragraphs
842-30-50-9 through 50-10
for sales-type leases and direct financing leases.
","snippet":"In addition to the disclosures required by paragraphs 842-30-50-3 through 50-7, a lessor also shall provide the disclosures in paragraphs 842-30-50-9 through 50-10 for sales-type leases and direct financing leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b944120d14edb4dc40649960b2ee3cce835741768ec225f9dfa08f4366f9e8ac","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-9","para":"50-9","html":"
A lessor shall explain significant changes in the balance of its unguaranteed residual assets and deferred selling profit on direct financing leases.
","snippet":"A lessor shall explain significant changes in the balance of its unguaranteed residual assets and deferred selling profit on direct financing leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1b7b73836f08842044dc424470d3138a6319e1d883304bae6ff274784219dba6","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-10","para":"50-10","html":"
A lessor shall disclose a maturity analysis of its lease receivables, showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessor shall disclose a reconciliation of the undiscounted cash flows to the lease receivables recognized in the statement of financial position (or disclosed separately in the notes).
","snippet":"A lessor shall disclose a maturity analysis of its lease receivables, showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:13d78fc95343961e49b2d3f87880ce453b23196fa82a7c533e9cb8861dc15085","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:16d185b5f66adf0720f5092b7d18530572d325b416b8de1786ba0f9e4068972b","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"block":null,"heading":"Operating Leases","paragraphs":[{"citation":"842-30-50-11","para":"50-11","html":"
In addition to the disclosures required by paragraphs
842-30-50-3 through 50-7
, a lessor also shall provide the disclosures in paragraphs
842-30-50-12 through 50-13
for operating leases.
","snippet":"In addition to the disclosures required by paragraphs 842-30-50-3 through 50-7, a lessor also shall provide the disclosures in paragraphs 842-30-50-12 through 50-13 for operating leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:43291e6f03ea740c5682c8d34252c4070a1820c5da94b9a8aed620b4f83a2885","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-12","para":"50-12","html":"
A lessor shall disclose a maturity analysis of lease payments, showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the remaining years. A lessor shall present that maturity analysis separately from the maturity analysis required by paragraph 842-30-50-10 for sales-type leases and direct financing leases.
","snippet":"A lessor shall disclose a maturity analysis of lease payments, showing the undiscounted cash flows to be received on an annual basis for a minimum of each of the first five years and a total of the amounts for the remain…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:08ba1068c77c591987eded84121fd06fbf449fcb4b1a1de61fe2a4270941ee7a","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"citation":"842-30-50-13","para":"50-13","html":"
A lessor shall provide disclosures required by Topic 360 on property, plant, and equipment separately for underlying assets under operating leases from owned assets.
","snippet":"A lessor shall provide disclosures required by Topic 360 on property, plant, and equipment separately for underlying assets under operating leases from owned assets.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0459cf442b69021cfe2e80b4f64631b9fb1f66bec24b1189d1e6c6f3229a76ee","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c36f4b6f5531bc36cfcf7d51daf7859e9fdcfe2e43e85d3159727ec4f2c5184e","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"block":null,"heading":"Separating Components of a Contract","paragraphs":[{"citation":"842-30-50-14","para":"50-14","html":"
A lessor that makes the accounting policy election in paragraph 842-10-15-39A shall disclose its accounting policy election and comply with the disclosure requirements in paragraphs
235-10-50-1 through 50-6
.
","snippet":"A lessor that makes the accounting policy election in paragraph 842-10-15-39A shall disclose its accounting policy election and comply with the disclosure requirements in paragraphs 235-10-50-1 through 50-6.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e2696f197ad2fcaeb50282a5daa957ccd7946987d7d6e4996808c315649defd","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cf5d612206bee9acc6b8c341b6b0f7ae0f117b83fc730134c89c4591ec4647b8","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e228df121a0928ecf2d756a04943112ec1f5265567a8abd2096f0395c773eb4e","downloaded_from":"2026-09-10T01:57:28.840Z","last_downloaded_at":"2026-09-10T01:57:28.840Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479773","source_sha256":"9599e3faff3defe4048b454affc6594950273ea0e47e5c7a132d36b957714802"}},{"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":"842-30-55-1","para":"55-1","html":"
This implementation guidance addresses the application of the provisions of this Subtopic in the following circumstances. A manufacturer sells equipment with an expected useful life of several years to end users (purchasers) utilizing various sales incentive programs. Under one such sales incentive program, the manufacturer contractually guarantees that the purchaser will receive a minimum resale amount at the time the equipment is disposed of, contingent on certain requirements.
","snippet":"This implementation guidance addresses the application of the provisions of this Subtopic in the following circumstances. A manufacturer sells equipment with an expected useful life of several years to end users (purchas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:da7ea3b74f9a0a9c7904f2596889dae66a73cd696db29ff31bcf42d63981a0ca","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-2","para":"55-2","html":"
The manufacturer provides the guarantee by agreeing to do either of the following:
  1. a
    Reacquire the equipment at a guaranteed price at specified time periods as a means to facilitate its resale
  2. b
    Pay the purchaser for the deficiency, if any, between the sales proceeds received for the equipment and the guaranteed minimum resale value.
There may be dealer involvement in these types of transactions, but the minimum resale guarantee is the responsibility of the manufacturer.
","snippet":"The manufacturer provides the guarantee by agreeing to do either of the following:\n(a) Reacquire the equipment at a guaranteed price at specified time periods as a means to facilitate its resale\n(b) Pay the purchaser for…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cc6811f55650c1c7e9ee483731827744c8a4912bfb129ea4c093190d28948b71","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-3","para":"55-3","html":"
A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it has either a right or an obligation to reacquire the equipment at a guaranteed price (or prices) at a specified time (or specified time periods) as a means to facilitate its resale should be evaluated in accordance with the guidance on satisfaction of performance obligations in paragraph 606-10-25-30 and the guidance on repurchase agreements in paragraphs
606-10-55-66 through 55-78
. If that evaluation results in a lease, the manufacturer should account for the transaction as a lease using the principles of lease accounting in Subtopic 842-10 and in this Subtopic.
","snippet":"A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it has either a right or an obligation to reacquire the equipment at a guaranteed price (or prices) at a specified …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e8b277f901f7e3a3c0ea7f37b2c10c71c35bfed4baf5427a8b890e49b7a81352","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-4","para":"55-4","html":"
A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it will pay a purchaser for the deficiency, if any, between the sales proceeds received for the equipment and the guaranteed minimum resale value should be accounted for in accordance with Topic 460 on guarantees and Topic 606 on revenue from contracts with customers.
","snippet":"A sales incentive program in which an entity (for example, a manufacturer) contractually guarantees that it will pay a purchaser for the deficiency, if any, between the sales proceeds received for the equipment and the g…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:cec55530303e9fdd49bf35ff4b981556a7c37737e58e8a1a0687324f52bdc902","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-5","para":"55-5","html":"
The lease payments used as part of the determination of whether the transaction should be classified as an operating lease, a direct financing lease, or a sales-type lease generally will be the difference between the proceeds upon the equipment's initial transfer and the amount of the residual value guarantee to the purchaser as of the first exercise date of the guarantee.
","snippet":"The lease payments used as part of the determination of whether the transaction should be classified as an operating lease, a direct financing lease, or a sales-type lease generally will be the difference between the pro…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:97cf7bae78db285dc01517ad132c02f41f3d2ab529230f42a1da4066bd60c0a0","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-6","para":"55-6","html":"
If the transaction qualifies as an operating lease, the net proceeds upon the equipment's initial transfer should be recorded as a liability in the manufacturer's balance sheet.
","snippet":"If the transaction qualifies as an operating lease, the net proceeds upon the equipment's initial transfer should be recorded as a liability in the manufacturer's balance sheet.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:49c96d0cb73aaca32a1543da3c9bc264129a722e727431c5b66268101f1a78f3","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-7","para":"55-7","html":"
The liability is then subsequently reduced on a pro rata basis over the period to the first exercise date of the guarantee to the amount of the guaranteed residual value at that date with corresponding credits to revenue in the manufacturer's income statement. Any further reduction in the guaranteed residual value resulting from the purchaser's decision to continue to use the equipment should be recognized in a similar manner.
","snippet":"The liability is then subsequently reduced on a pro rata basis over the period to the first exercise date of the guarantee to the amount of the guaranteed residual value at that date with corresponding credits to revenue…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b090c5a9263bfaf760cb2dbfa4d3db8f4fa21d0eedc00fa2f079b5b6d8e507a","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-8","para":"55-8","html":"
The equipment should be included in the manufacturer's balance sheet and depreciated following the manufacturer's normal depreciation policy.
","snippet":"The equipment should be included in the manufacturer's balance sheet and depreciated following the manufacturer's normal depreciation policy.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c7eea9dcd1d2861e180c1e88eed94148a33dad0abf1ac8119cd6df9b1c4d3775","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-9","para":"55-9","html":"
The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 on property, plant, and equipment provide guidance on the accounting for any potential impairment of the equipment.
","snippet":"The Impairment or Disposal of Long-Lived Assets Subsections of Subtopic 360-10 on property, plant, and equipment provide guidance on the accounting for any potential impairment of the equipment.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2673f42dff0c924794da094b061b38b9d425eb2fb43032cab7c941c1e40b62b4","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-10","para":"55-10","html":"
At the time the purchaser elects to exercise the residual value guarantee by selling the equipment to another party, the liability should be reduced by the amount, if any, paid to the purchaser. The remaining undepreciated carrying amount of the equipment and any remaining liability should be removed from the balance sheet and included in the determination of income of the period of the equipment's sale.
","snippet":"At the time the purchaser elects to exercise the residual value guarantee by selling the equipment to another party, the liability should be reduced by the amount, if any, paid to the purchaser. The remaining undepreciat…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:385045ed6dc2426e0dcbae893d4e3567d08b67bb3434ecd230df6d70cc313cc9","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-11","para":"55-11","html":"
Alternatively, if the purchaser exercises the residual value guarantee by selling the equipment to the manufacturer at the guaranteed price, the liability should be reduced by the amount paid to the purchaser. Any remaining liability should be included in the determination of income of the period of the exercise of the guarantee.
","snippet":"Alternatively, if the purchaser exercises the residual value guarantee by selling the equipment to the manufacturer at the guaranteed price, the liability should be reduced by the amount paid to the purchaser. Any remain…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7323317ecfa22f598c3b539b856e0f47c951e436955d1a30afbb77ce1b04fb07","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-12","para":"55-12","html":"
The accounting for a guaranteed minimum resale value is not in the scope of Topic 815 on derivatives and hedging. In the transaction described, the embedded guarantee feature is not an embedded derivative instrument that must be accounted for separately from the lease because it does not meet the criterion in paragraph 815-15-25-1(c).
","snippet":"The accounting for a guaranteed minimum resale value is not in the scope of Topic 815 on derivatives and hedging. In the transaction described, the embedded guarantee feature is not an embedded derivative instrument that…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bca360c3905bcbd232e211b26ff164bfa836101775f4d3a73fb5310b7a915317","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-13","para":"55-13","html":"
Specifically, if freestanding, the guarantee feature would be excluded from the scope of paragraph 815-10-15-59(b) because of both of the following conditions:
  1. a
    It is not exchange traded.
  2. b
    The underlying on which settlement is based is the price of a nonfinancial asset of one of the parties, and that asset is not readily convertible to cash. It is assumed that the equipment is not readily convertible to cash, as that phrase is used in Topic 815.
","snippet":"Specifically, if freestanding, the guarantee feature would be excluded from the scope of paragraph 815-10-15-59(b) because of both of the following conditions:\n(a) It is not exchange traded.\n(b) The underlying on which s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3e975761408b75ff6c770c938e378b65c89f2b47a89e0e4b76b6fc303c86bc31","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-14","para":"55-14","html":"
Paragraph 815-10-15-59(b)(2) states that the related exception applies only if the nonfinancial asset related to the underlying is owned by the party that would not benefit under the contract from an increase in the price or value of the nonfinancial asset. (In some circumstances, the exclusion in paragraph 815-10-15-63 also would apply.)
","snippet":"Paragraph 815-10-15-59(b)(2) states that the related exception applies only if the nonfinancial asset related to the underlying is owned by the party that would not benefit under the contract from an increase in the pric…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:953315166dde4ee2d91741f96c1650913231c0fcfc944ddb1f7454684594a966","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-15","para":"55-15","html":"
Lastly, Topic 460 on guarantees does not affect the guarantor's accounting for the guarantee because that Topic does not apply to a guarantee for which the underlying is related to an asset of the guarantor. Because the manufacturer continues to recognize the residual value of the equipment guaranteed by the manufacturer as an asset (included in the seller-lessor's net investment in the lease) if recording a sales-type lease, that guarantee does not meet the characteristics in paragraph 460-10-15-4 and is, therefore, not subject to the guidance in Topic 460. Additionally, if the lease is classified as an operating lease, the manufacturer does not remove the asset from its books, and its guarantee would be a market value guarantee of its own asset. A market value guarantee of the guarantor's own asset is not within the scope of Topic 460, and the guidance in paragraphs
842-10-55-32 through 55-33
for an operating lease is not affected. As a result, the guarantor's accounting for the guarantee is unaffected by Topic 460.
","snippet":"Lastly, Topic 460 on guarantees does not affect the guarantor's accounting for the guarantee because that Topic does not apply to a guarantee for which the underlying is related to an asset of the guarantor. Because the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c86a4f4764a7bca2dc79ae4c0fd7441a7e954451755adedca0074962ffdd979","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-16","para":"55-16","html":"
Indemnification payments related to tax effects other than the investment tax credit should be reflected by the lessor in income consistent with the classification of the lease. That is, the payments should be accounted for as an adjustment of the lessor's net investment in the lease if the lease is a sales-type lease or a direct financing lease or recognized ratably over the lease term if the lease is an operating lease.
","snippet":"Indemnification payments related to tax effects other than the investment tax credit should be reflected by the lessor in income consistent with the classification of the lease. That is, the payments should be accounted …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d63e57ea48f323550744216cc6f6e851670b5497e87c82a1e6b83dd3850eb32","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-17","para":"55-17","html":"
This Subtopic considers the right to control the use of the underlying asset as the equivalent of physical use. If the lessee controls the use of the underlying asset, recognition of lease income in accordance with paragraph 842-30-25-11(a) should not be affected by the extent to which the lessee uses the underlying asset.
","snippet":"This Subtopic considers the right to control the use of the underlying asset as the equivalent of physical use. If the lessee controls the use of the underlying asset, recognition of lease income in accordance with parag…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54df479960fd9d74fcda94ab20be11f114c8a5074d3f66f7077f01aaaa45b3c4","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-17A","para":"55-17A","html":"
Notwithstanding the definition of fair value, if a lessor is not a manufacturer or a dealer, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant lapse of time between the acquisition of the underlying asset and lease commencement, the definition of fair value shall be applied.
","snippet":"Notwithstanding the definition of fair value, if a lessor is not a manufacturer or a dealer, the fair value of the underlying asset at lease commencement is its cost, reflecting any volume or trade discounts that may app…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ae1581372122617943e1c28b2ec654a0edfbbe213caedb9e272c3b356935dfa","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:49e7c4c1588eaa9f6ea872b812f569ed515f023d875fcee6bb69e4e55f393510","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-30-55-18","para":"55-18","html":"
Example 1 illustrates how a lessor would account for sales-type leases and direct financing leases.
","snippet":"Example 1 illustrates how a lessor would account for sales-type leases and direct financing leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:614d0b58b87697040b72ff2af5ba5d8cfda7d5be797cefed863a7ccb783a25f1","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-19","para":"55-19","html":"
Lessor enters into a 6-year lease of equipment with Lessee, receiving annual lease payments of $9,500, payable at the end of each year. Lessee provides a residual value guarantee of $13,000. Lessor concludes that it is probable it will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee. The equipment has a 9-year estimated remaining economic life, a carrying amount of $54,000, and a fair value of $62,000 at the commencement date. Lessor expects the residual value of the equipment to be $20,000 at the end of the 6-year lease term. The lease does not transfer ownership of the underlying asset to Lessee or contain an option for Lessee to purchase the underlying asset. Lessor incurs $2,000 in initial direct costs in connection with obtaining the lease, and no amounts are prepaid by Lessee to Lessor. The rate implicit in the lease is 5.4839 percent.
","snippet":"Lessor enters into a 6-year lease of equipment with Lessee, receiving annual lease payments of $9,500, payable at the end of each year. Lessee provides a residual value guarantee of $13,000. Lessor concludes that it is p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3917cdba2bd92d0647499f7a1bfda5e9f97891b5f89218767d5366e965b44b8d","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-20","para":"55-20","html":"
Lessor classifies the lease as a sales-type lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the lessee amounts to substantially all of the fair value of the equipment. None of the other criteria to be classified as a sales-type lease are met. In accordance with paragraph 842-10-25-4, the discount rate used to determine the present value of the lease payments and the present value of the residual value guaranteed by Lessee (5.4839 percent) for purposes of assessing whether the lease is a sales-type lease under the criterion in paragraph 842-10-25-2(d) assumes that no initial direct costs will be capitalized because the fair value of the equipment is different from its carrying amount.
","snippet":"Lessor classifies the lease as a sales-type lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the lessee amounts to substantially all of the fair v…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ac9b823858eac2bfd2ef907d427a3b01eb98021d88247c932a43e9712b04840d","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-21","para":"55-21","html":"
Lessor measures the net investment in the lease at $62,000 at lease commencement, which is equal to the fair value of the equipment. The net investment in the lease consists of the lease receivable (which includes the 6 annual payments of $9,500 and the residual value guarantee of $13,000, both discounted at the rate implicit in the lease, which equals $56,920) and the present value of the unguaranteed residual value (the present value of the difference between the expected residual value of $20,000 and the residual value guarantee of $13,000, which equals $5,080). Lessor calculates the selling profit on the lease as $8,000, which is the difference between the lease receivable ($56,920) and the carrying amount of the equipment net of the unguaranteed residual asset ($54,000 - $5,080 = $48,920). The initial direct costs do not factor into the calculation of the selling profit in this Example because they are not eligible for deferral on the basis of the guidance in paragraph 842-30-25-1(c) (that is, because the fair value of the underlying asset is different from its carrying amount at the commencement date).
","snippet":"Lessor measures the net investment in the lease at $62,000 at lease commencement, which is equal to the fair value of the equipment. The net investment in the lease consists of the lease receivable (which includes the 6 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:32a9da9f58e97d7130fd61c383a8b2bb4a88f4bef61d9dd0ccb3e966056b30d6","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-22","para":"55-22","html":"
At the commencement date, Lessor derecognizes the equipment (carrying amount of $54,000) and recognizes the net investment in the lease of $62,000 and the selling profit of $8,000. Lessor also pays and recognizes the initial direct costs of $2,000 as an expense.
","snippet":"At the commencement date, Lessor derecognizes the equipment (carrying amount of $54,000) and recognizes the net investment in the lease of $62,000 and the selling profit of $8,000. Lessor also pays and recognizes the ini…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:85f03601f74d1a9682dc6f36c9a9ddede1ed5822368969fdb8a4b4df2c4f4a71","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-23","para":"55-23","html":"
At the end of Year 1, Lessor recognizes the receipt of a lease payment of $9,500 and interest on the net investment in the lease (the beginning balance of the net investment in the lease of $62,000 × the rate implicit in the lease of 5.4839% = $3,400), resulting in a balance in the net investment of the lease of $55,900. For disclosure purposes, Lessor also calculates the separate components of the net investment in the lease: the lease receivable and the unguaranteed residual asset. The lease receivable equals $50,541 (the beginning balance of the lease receivable of $56,920 - the annual lease payment received of $9,500 + the amount of interest income on the lease receivable during Year 1 of $3,121, which is $56,920 × 5.4839%). The unguaranteed residual asset equals $5,360 (the beginning balance of the unguaranteed residual asset of $5,081 + the interest income on the unguaranteed residual asset during Year 1 of $279, which is $5,081 × 5.4839%).
","snippet":"At the end of Year 1, Lessor recognizes the receipt of a lease payment of $9,500 and interest on the net investment in the lease (the beginning balance of the net investment in the lease of $62,000 × the rate implicit in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a333b7b84a3593a9fa2e2a47b176637d6c5f4c497b884210c845b94e05202322","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-24","para":"55-24","html":"
At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment.
","snippet":"At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ef80cd40c44b7e9b04145bbdd81efec7b886a300300427869df67c4865a42fe2","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-25","para":"55-25","html":"
Assume the same facts and circumstances as in Case A (paragraphs
842-30-55-19 through 55-24
), except that it is not probable Lessor will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee. In reaching this conclusion, the entity observes that Lessee's ability and intention to pay may be in doubt because of the following factors:
  1. a
    Lessee intends to make the lease payments primarily from income derived from its business in which the equipment will be used (which is a business facing significant risks because of high competition in the industry and Lessee's limited experience)
  2. b
    Lessee has limited credit history and no significant other income or assets with which to make the payments if the business is not successful.
","snippet":"Assume the same facts and circumstances as in Case A (paragraphs 842-30-55-19 through 55-24), except that it is not probable Lessor will collect the lease payments and any amount necessary to satisfy the residual value g…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:df09c5d4d8cb2e9e82debebd07c4006b585350aac13c10394cacd8da10ecc3ff","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-26","para":"55-26","html":"
In accordance with paragraph 842-30-25-3, Lessor does not derecognize the equipment and does not recognize a net investment in the lease or any selling profit or selling loss. However, consistent with Case A, Lessor pays and recognizes the initial direct costs of $2,000 as an expense at the commencement date.
","snippet":"In accordance with paragraph 842-30-25-3, Lessor does not derecognize the equipment and does not recognize a net investment in the lease or any selling profit or selling loss. However, consistent with Case A, Lessor pays…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58a0bc8fdf1385d111bee6d48bbeffcd312a9d875144009891f18cea32a6c747","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-27","para":"55-27","html":"
At the end of Year 1, Lessor reassesses whether it is probable it will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee and concludes that it is not probable. In addition, neither of the events in paragraph 842-30-25-3(b) has occurred. The contract has not been terminated and Lessor has not repossessed the equipment because Lessee is fulfilling the terms of the contract. Consequently, Lessor accounts for the $9,500 Year 1 lease payment as a deposit liability in accordance with paragraph 842-30-25-3. Lessor recognizes depreciation expense on the equipment of $7,714 ($54,000 carrying value ÷ 7-year useful life).
","snippet":"At the end of Year 1, Lessor reassesses whether it is probable it will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee and concludes that it is not probable.…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d3bceffc7aa87d8fb622626e8c340def54eae1ace75898371885d9623c20d3f5","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-28","para":"55-28","html":"
Lessor's accounting in Years 2 and 3 is the same as in Year 1. At the end of Year 4, Lessee makes the fourth $9,500 annual lease payment such that the deposit liability equals $38,000. Lessor concludes that collectibility of the lease payments and any amount necessary to satisfy the residual value guarantee provided by Lessee is now probable on the basis of Lessee's payment history under the contract and the fact that Lessee has been successfully operating its business for four years. Lessor does not reassess the classification of the lease as a sales-type lease.
","snippet":"Lessor's accounting in Years 2 and 3 is the same as in Year 1. At the end of Year 4, Lessee makes the fourth $9,500 annual lease payment such that the deposit liability equals $38,000. Lessor concludes that collectibilit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3211cdaa35a6605c0f05f28c9201a05f06b147383eac88a867ef6a3e7df54986","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-29","para":"55-29","html":"
Consequently, at the end of Year 4, Lessor derecognizes the equipment, which has a carrying amount of $23,143, and recognizes a net investment in the lease of $35,519. The net investment in the lease consists of the lease receivable (the sum of the 2 remaining annual payments of $9,500 and the residual value guarantee of $13,000, discounted at the rate implicit in the lease of 5.4839 percent determined at the commencement date, which equals $29,228) and the unguaranteed residual asset (the present value of the difference between the expected residual value of $20,000 and the residual value guarantee of $13,000, which equals $6,291). Lessor recognizes selling profit of $50,376, the difference between (a) the sum of the lease receivable and the carrying amount of the deposit liability ($29,228 lease receivable + $38,000 in lease payments already made = $67,228) and (b) the carrying amount of the equipment, net of the unguaranteed residual asset ($23,143 - $6,291 = $16,852).
","snippet":"Consequently, at the end of Year 4, Lessor derecognizes the equipment, which has a carrying amount of $23,143, and recognizes a net investment in the lease of $35,519. The net investment in the lease consists of the leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a48659a9b101f41c60a0f3fec35e49183ddd71dfd50f6022ed72a3a4d62b933a","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-30","para":"55-30","html":"
After the end of Year 4, Lessor accounts for the remaining two years of the lease in the same manner as any other sales-type lease. Consistent with Case A, at the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment.
","snippet":"After the end of Year 4, Lessor accounts for the remaining two years of the lease in the same manner as any other sales-type lease. Consistent with Case A, at the end of Year 6, Lessor reclassifies the net investment in …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f8a96e34e85323d11077a409f2631d1d4ef8fa53e631baaa2725db0393aadb65","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-31","para":"55-31","html":"
Assume the same facts and circumstances as in Case A (paragraphs
842-30-55-19 through 55-24
), except that the $13,000 residual value guarantee is provided by a third party, not by Lessee. Collectibility of the lease payments and any amount necessary to satisfy the third-party residual value guarantee is probable.
","snippet":"Assume the same facts and circumstances as in Case A (paragraphs 842-30-55-19 through 55-24), except that the $13,000 residual value guarantee is provided by a third party, not by Lessee. Collectibility of the lease paym…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8f523b81b5a3b5fda5e4a32cfaa75d9d324c42b3a0dcba5ddced117ef418b4ab","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-32","para":"55-32","html":"
None of the criteria in paragraph 842-10-25-2 to be classified as a sales-type lease are met. In accordance with paragraph 842-10-25-4, the discount rate used to determine the present value of the lease payments (5.4839 percent) for purposes of assessing whether the lease is a sales-type lease under the criterion in paragraph 842-10-25-2(d) assumes that no initial direct costs will be capitalized because the fair value of the equipment is different from its carrying amount.
","snippet":"None of the criteria in paragraph 842-10-25-2 to be classified as a sales-type lease are met. In accordance with paragraph 842-10-25-4, the discount rate used to determine the present value of the lease payments (5.4839 …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bd1f185f370279abc7e1f1b94f97f822e6c44a143cc1a4d4ddff3cc5659017ca","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-32A","para":"55-32A","html":"
Rather, Lessor classifies the lease as a direct financing lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the third party amounts to substantially all of the fair value of the equipment, and it is probable that Lessor will collect the lease payments plus any amount necessary to satisfy the third-party residual value guarantee. The discount rate used to determine the present value of the lease payments and the present value of the third-party residual value guarantee for purposes of assessing whether the lease meets the criterion in paragraph 842-10-25-3(b)(1) to be classified as a direct financing lease is the rate implicit in the lease of 4.646 percent, which includes the initial direct costs of $2,000 that Lessor incurred.
","snippet":"Rather, Lessor classifies the lease as a direct financing lease because the sum of the present value of the lease payments and the present value of the residual value guaranteed by the third party amounts to substantiall…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f3c71c2fb627c3e9aee4e6d0b10fd9cf3e47857489cef0facd9a57ba5b99b2f1","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-33","para":"55-33","html":"
At the commencement date, Lessor derecognizes the equipment and recognizes a net investment in the lease of $56,000, which is equal to the carrying amount of the underlying asset of $54,000 plus the initial direct costs of $2,000 that are included in the measurement of the net investment in the lease in accordance with paragraph 842-30-25-8 (that is, because the lease is classified as a direct financing lease). The net investment in the lease includes a lease receivable of $58,669 (the present value of the 6 annual lease payments of $9,500 and the third-party residual value guarantee of $13,000, discounted at the rate implicit in the lease of 4.646 percent), an unguaranteed residual asset of $5,331 (the present value of the difference between the estimated residual value of $20,000 and the third-party residual value guarantee of $13,000, discounted at 4.646 percent), and deferred selling profit of $8,000.
","snippet":"At the commencement date, Lessor derecognizes the equipment and recognizes a net investment in the lease of $56,000, which is equal to the carrying amount of the underlying asset of $54,000 plus the initial direct costs …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ee537a4b5b08078919d2906a51ece7a8d40d5209a98c862cd88dba5a72ed2b96","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-34","para":"55-34","html":"
Lessor calculates the deferred selling profit of $8,000 in this Example as follows:
  1. a
    The lease receivable ($58,669); minus
  2. b
    The carrying amount of the equipment ($54,000), net of the unguaranteed residual asset ($5,331), which equals $48,669; minus
  3. c
    The initial direct costs included in the measurement of the net investment in the lease ($2,000).
","snippet":"Lessor calculates the deferred selling profit of $8,000 in this Example as follows:\n(a) The lease receivable ($58,669); minus\n(b) The carrying amount of the equipment ($54,000), net of the unguaranteed residual asset ($5…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c76f03dd0b3ff24d27f945874ebb04e0857ca87f5e970df89a0a0ad160e07e81","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-35","para":"55-35","html":"
At the end of Year 1, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease of $4,624 (the beginning balance of the net investment in the lease of $56,000 × the discount rate that, at the commencement date, would have resulted in the sum of the lease receivable and the unguaranteed residual asset equaling $56,000, which is 8.258 percent), resulting in a balance in the net investment of the lease of $51,124.
","snippet":"At the end of Year 1, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease of $4,624 (the beginning balance of the net investment in the lease of $56,000 × the disc…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2d1e2264bf3c4e8f234132c4491422f294a1abb045f0bd541581f2b28b8f7d79","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-36","para":"55-36","html":"
Also at the end of Year 1, Lessor calculates, for disclosure purposes, the separate components of the net investment in the lease: the lease receivable, the unguaranteed residual asset, and the deferred selling profit. The lease receivable equals $51,895 (the beginning balance of the lease receivable of $58,669 - the annual lease payment received of $9,500 + the amount of interest income on the lease receivable during Year 1 of $2,726, which is $58,669 × 4.646%). The unguaranteed residual asset equals $5,578 (the beginning balance of the unguaranteed residual asset of $5,331 + the interest income on the unguaranteed residual asset during Year 1 of $247, which is $5,331 × 4.646%). The deferred selling profit equals $6,349 (the initial deferred selling profit of $8,000 - $1,651 recognized during Year 1 [the $1,651 is the difference between the interest income recognized on the net investment in the lease during Year 1 of $4,624 calculated in paragraph 842-30-55-35 and the sum of the interest income earned on the lease receivable and the unguaranteed residual asset during Year 1]).
","snippet":"Also at the end of Year 1, Lessor calculates, for disclosure purposes, the separate components of the net investment in the lease: the lease receivable, the unguaranteed residual asset, and the deferred selling profit. T…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f515bafa5a3d70c8221ea6a292c2308c0a8721bc9db9be7dc464bbf0f308eddc","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-37","para":"55-37","html":"
At the end of Year 2, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease (the beginning of Year 2 balance of the net investment in the lease of $51,124 × 8.258%, which is $4,222), resulting in a carrying amount of the net investment in the lease of $45,846.
","snippet":"At the end of Year 2, Lessor recognizes the receipt of the lease payment of $9,500 and interest on the net investment in the lease (the beginning of Year 2 balance of the net investment in the lease of $51,124 × 8.258%, …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:116c0d0f62a94afb73ec5795d23e6b9feac092d49a9eaaaaa282287109bd67c8","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-38","para":"55-38","html":"
Also at the end of Year 2, Lessor calculates the separate components of the net investment in the lease. The lease receivable equals $44,806 (the beginning of Year 2 balance of $51,895 - the annual lease payment received of $9,500 + the interest income earned on the lease receivable during Year 2 of $2,411, which is $51,895 × 4.646%). The unguaranteed residual asset equals $5,837 (the beginning of Year 2 balance of the unguaranteed residual asset of $5,578 + the interest income earned on the unguaranteed residual asset during Year 2 of $259, which is $5,578 × 4.646%). The deferred selling profit equals $4,797 (the beginning of Year 2 balance of deferred selling profit of $6,349 - $1,552 recognized during Year 2 [the $1,552 is the difference between the interest income recognized on the net investment in the lease during Year 2 of $4,222 and the sum of the interest income earned on the lease receivable and the unguaranteed residual asset during Year 2]).
","snippet":"Also at the end of Year 2, Lessor calculates the separate components of the net investment in the lease. The lease receivable equals $44,806 (the beginning of Year 2 balance of $51,895 - the annual lease payment received…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:91ca71a2bac7f7371381f0a98e488b390f2532e94be5cd39528e29cc81403a1c","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-39","para":"55-39","html":"
At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment.
","snippet":"At the end of Year 6, Lessor reclassifies the net investment in the lease, then equal to the estimated residual value of the underlying asset of $20,000, as equipment.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d0a0832e17b0fb7c71c095b2842616990e6ad6a18deed877edbfb2cc0ad71c65","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-40","para":"55-40","html":"
Assume the same facts and circumstances as Case C (paragraphs
842-30-55-31 through 55-39
), except that collectibility of the lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party is not probable and the lease payments escalate every year over the lease term. Specifically, the lease payment due at the end of Year 1 is $7,000, and subsequent payments increase by $1,000 every year for the remainder of the lease term. Because it is not probable that Lessor will collect the lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party in accordance with paragraph 842-10-25-3, Lessor classifies the lease as an operating lease.
","snippet":"Assume the same facts and circumstances as Case C (paragraphs 842-30-55-31 through 55-39), except that collectibility of the lease payments and any amount necessary to satisfy the residual value guarantee provided by the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:159c9f9cb5b5aeae3a69e95aca348c9f6d5ec66b4d5e10e684a23c3cbf329f2a","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-41","para":"55-41","html":"
Lessor continues to measure the equipment in accordance with Topic 360 on property, plant, and equipment.
","snippet":"Lessor continues to measure the equipment in accordance with Topic 360 on property, plant, and equipment.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3878fa6f26e9f364a75e01b81c0f08a313891d5d705dd96532abf29cb9f63277","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-42","para":"55-42","html":"
Because collectibility of the lease payments is not probable, Lessor recognizes lease income only when Lessee makes the lease payments, and in the amount of those lease payments. Therefore, Lessor only recognizes lease income of $7,000 at the point in time Lessee makes the end of Year 1 payment for that amount.
","snippet":"Because collectibility of the lease payments is not probable, Lessor recognizes lease income only when Lessee makes the lease payments, and in the amount of those lease payments. Therefore, Lessor only recognizes lease i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:41e3640d1ea4da9e253da986c49a6eb5c642b8a6fc792564641a6526d161c61f","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}},{"citation":"842-30-55-43","para":"55-43","html":"
At the end of Year 2, Lessor concludes that collectibility of the remaining lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party is probable; therefore, Lessor recognizes lease income of $12,000. The amount of $12,000 is the difference between lease income that would have been recognized through the end of Year 2 ($57,000 in total lease payments ÷ 6 years = $9,500 per year × 2 years = $19,000) and the $7,000 in lease income previously recognized. Collectibility of the remaining lease payments remains probable throughout the remainder of the lease term; therefore, Lessor continues to recognize lease income of $9,500 each year.
","snippet":"At the end of Year 2, Lessor concludes that collectibility of the remaining lease payments and any amount necessary to satisfy the residual value guarantee provided by the third party is probable; therefore, Lessor recog…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d287a5288690734cb3c3dd98c839f432683767cb0ccb8069297eef52e8f788cc","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c4b164b30e8c104d39ac9a6db91f380bc0112ea1457f95eedbd0c7bbed8d430b","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9111149439b8af1a18c284ea760b2e3618daa686a92b7300437c03e8966a3e43","downloaded_from":"2026-09-10T01:57:30.582Z","last_downloaded_at":"2026-09-10T01:57:30.582Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479619","source_sha256":"0e12a3ec1a0d970459cb2e9b293645d447da8fd6fae453d551d4d3accba38bf0"}}],"enrichment":{"summary":"ASC 842-30 governs how lessors account for leases already classified under 842-10 as sales-type, direct financing, or operating leases. For sales-type and direct financing leases the lessor derecognizes the underlying asset and recognizes a net investment in the lease (lease receivable plus unguaranteed residual asset, discounted at the rate implicit in the lease), with selling profit recognized immediately in a sales-type lease but deferred into the net investment in a direct financing lease; interest income then accretes at a constant periodic rate. For operating leases the lessor keeps the asset on its books and recognizes lease payments as income straight-line (or another systematic and rational basis) over the lease term, and a collectibility-not-probable assessment overrides normal recognition in all three models.","key_points":["At commencement of a sales-type lease the lessor recognizes a net investment in the lease and selling profit or loss and derecognizes the underlying asset (842-30-25-1, 842-30-40-1); initial direct costs are expensed if the underlying asset's fair value differs from its carrying amount, and otherwise deferred into the net investment (842-30-25-1(c)).","The net investment equals the lease receivable—present value of unreceived lease payments plus any residual value guaranteed by the lessee or an unrelated third party—plus the unguaranteed residual asset, both discounted at the rate implicit in the lease (842-30-30-1); for a direct financing lease that amount is reduced by any selling profit, which is deferred along with initial direct costs (842-30-30-2, 842-30-25-8).","After commencement the lessor accretes interest income at a constant periodic discount rate on the remaining net investment, reduces it for payments collected, does not remeasure absent a modification not accounted for as a separate contract, and records a loss allowance under Subtopic 326-20 considering the collateral (842-30-35-1 through 35-3).","If collectibility of the lease payments plus any lessee residual value guarantee is not probable at commencement, the lessor does not derecognize the asset and records payments received as a deposit liability until collectibility becomes probable or the contract is terminated/asset repossessed with nonrefundable payments (842-30-25-3); on becoming probable the lessor derecognizes the asset and deposit liability and recognizes a net investment and selling profit or loss (842-30-25-4).","If collectibility is probable at commencement for a sales-type or direct financing lease, it is not reassessed; later credit deterioration is handled through the 326-20 loss allowance (842-30-25-6).","For operating leases the lessor defers initial direct costs and recognizes lease payments as income straight-line (or another systematic and rational basis), variable lease payments when the triggering facts occur, and initial direct costs as expense on the same basis as lease income (842-30-25-10 through 25-11); if collectibility is not probable, income is capped at cash collected (842-30-25-12) with a current-period catch-up adjustment when the assessment changes (842-30-25-13).","Presentation and disclosure: net investment in sales-type and direct financing leases is presented separately from other assets (842-30-45-1), commencement-date profit or loss is presented in a manner reflecting the lessor's business model (gross revenue/COGS or a single net line item) (842-30-45-4), lease cash receipts are operating activities (842-30-45-5), and lessors must give tabular lease income, net investment components, residual risk management, and separate five-year maturity analyses for finance and operating leases (842-30-50-5 through 50-12)."],"categories":["Leases","Recognition","Subsequent measurement","Disclosure"],"audience_level":"intermediate","student_note":"The classic exam traps are (1) selling profit is recognized immediately in a sales-type lease but deferred into the net investment in a direct financing lease, and (2) initial direct costs are expensed only when fair value ≠ carrying amount of the underlying asset. Also remember the collectibility gate: if collection is not probable at commencement, the lessor keeps the asset and books cash received as a deposit liability (or, for operating leases, caps income at cash collected).","related_topics":["842-10","842-20","842-40","326-20","360-10","606"],"key_concepts":["net investment in the lease","lease receivable","unguaranteed residual asset","selling profit or loss","rate implicit in the lease","collectibility probable assessment","deposit liability","initial direct costs"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:910bdd5f81d1f4ac86bb712062eebe12d96e0a4ec13c2e3a97b462eb8eeeca0b","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","score":0.8061,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3891d9b7a57df45e126edd7d63450d9b809c74c64a32ee7946a8f3dbc2026cad","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.7937,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61ade555d7223c0226f2e2f9e7a979367df2dfc7f22ef453f45d08c5febb4a17","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-10","title":"Overall","topic_title":"Leases","score":0.7496,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af5c5365c9a5d230c931cbfeac1afa2ed8f6f35433c45865cfa49448daee3407","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"610-20","title":"Gains and Losses from the Derecognition of Nonfinancial Assets","topic_title":"Other Income","score":0.7477,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:00e8bcf5e370be68ae32c18054bd64b2bf62902396863ff7a8ee5fd7704f0ea6","downloaded_from":"2026-09-10T00:54:49.448Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","score":0.7198,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:46c0576bc5c017edc3f17a21500cecc9a47b637d4fdb1991f259cd8e7b23aa33","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"360-10","title":"Overall","topic_title":"Property, Plant, and Equipment","score":0.6963,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af6c2cb54cdc76f95a90802835cb51c9e5ce29c2edbe978a16a1e23122d0618d","downloaded_from":"2026-09-10T00:05:35.818Z","last_downloaded_at":"2026-09-10T00:06:33.252Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-20","title":"Lessee","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5377341dd9f13f31207724ba7a25c6115744e489d82131002fdbe535c0995832","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:057b8206d74ec5dfc6e2d0c2d575439b0fbccc007d16db447a45f7d25c1bbc20","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:45809e91fd413b27172b3c4c09edacbf1da5c137c45fd0ee7c3c06fc04d99a8c","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-40","topic":"842","title":"Sale and Leaseback Transactions","area":"Broad Transactions","paragraphs":62,"summary":"ASC 842-40 governs sale and leaseback transactions, in which a seller-lessee transfers an asset to a buyer-lessor and leases it back. The threshold question is whether the transfer qualifies as a sale under Topic 606's control-transfer guidance; if it does, the seller-lessee derecognizes the asset, recognizes the sale at the transaction price, and accounts for the leaseback under 842-20, while the buyer-lessor accounts for the purchase under other Topics and the lease under 842-30. If the transfer is not a sale (e.g., the leaseback is a finance/sales-type lease or there is a non-fair-value repurchase option), the transaction is a failed sale accounted for as a financing by both parties.","concepts":["sale and leaseback","transfer of control","failed sale financing","repurchase option","off-market terms","lessee control during construction","seller-lessee","buyer-lessor"],"categories":["Leases","Recognition","Derecognition","Revenue"],"level":"intermediate","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-40-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Commencement Date of the Lease (Commencement Date) Added Accounting Standards Update No. 2016-02 02/25/2016
Contract Added Accounting Standards Update No. 2016-02 02/25/2016
Direct Financing Lease Amended Accounting Standards Update No. 2021-05 07/19/2021
Direct Financing Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Fair Value (2nd def.) Added Accounting Standards Update No. 2016-02 02/25/2016
Finance Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Payments Added Accounting Standards Update No. 2016-02 02/25/2016
Lease Term Added Accounting Standards Update No. 2016-02 02/25/2016
Lessee Added Accounting Standards Update No. 2016-02 02/25/2016
Lessor Added Accounting Standards Update No. 2016-02 02/25/2016
Market Participants Added Accounting Standards Update No. 2016-02 02/25/2016
Operating Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Orderly Transaction Added Accounting Standards Update No. 2016-02 02/25/2016
Related Parties Added Accounting Standards Update No. 2016-02 02/25/2016
Residual Value Guarantee Added Accounting Standards Update No. 2016-02 02/25/2016
Sales-Type Lease Amended Accounting Standards Update No. 2021-05 07/19/2021
Sales-Type Lease Added Accounting Standards Update No. 2016-02 02/25/2016
Sublease Added Accounting Standards Update No. 2016-02 02/25/2016
Underlying Asset Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-05-1 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-15-1 through 15-3
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-25-1 through 25-5
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-30-1 through 30-6
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-30-6 Amended Accounting Standards Update No. 2018-10 07/18/2018
842-40-50-1 Amended Accounting Standards Update No. 2021-09 11/11/2021
842-40-50-1 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-50-2 Amended Accounting Standards Update No. 2021-09 11/11/2021
842-40-50-2 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-55-1 through 55-44
 Added Accounting Standards Update No. 2016-02 02/25/2016
842-40-55-33 Amended Accounting Standards Update No. 2018-10 07/18/2018
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nCommencement Date of the Lease (Commencement Date) | Added | Accounting Standards Update…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8bc6671d0e061ec6bd26c9a27162d49046059727d43a7673868c13c1a9bde62c","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:35.813Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479761","source_sha256":"79ff53ca502475d3e9f58e333f201d93f45d11ce8017ccab56c7276f27067756"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dfea2a6ac805fea5627adfe06f85fc01c6f61829893a5da3217e42b8d3065f20","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:35.813Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479761","source_sha256":"79ff53ca502475d3e9f58e333f201d93f45d11ce8017ccab56c7276f27067756"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:009576875b61227dd752d2225f1c4e3cf99a0b754129e435926d69a44de0f4c2","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:35.813Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479761","source_sha256":"79ff53ca502475d3e9f58e333f201d93f45d11ce8017ccab56c7276f27067756"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-40-05-1","para":"05-1","html":"
This Subtopic addresses accounting for sale and leaseback transactions when a lease has been accounted for in accordance with Subtopic 842-10 and either Subtopic 842-20 or Subtopic 842-30.
","snippet":"This Subtopic addresses accounting for sale and leaseback transactions when a lease has been accounted for in accordance with Subtopic 842-10 and either Subtopic 842-20 or Subtopic 842-30.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:336458879654c072e77721ef142fc8254d998f8f40827795bad88be22f77f50b","downloaded_from":"2026-09-10T01:57:38.076Z","last_downloaded_at":"2026-09-10T01:57:38.076Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479639","source_sha256":"0b83b19019fc0206e9b4603bad781e252e0671a9700d15a3d09565e58a7fd176"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2a9df2db1dcb7dd8dcbfde4f7f6eeb67db50d06c276d5e5b1ca89b9c44427ff5","downloaded_from":"2026-09-10T01:57:38.076Z","last_downloaded_at":"2026-09-10T01:57:38.076Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479639","source_sha256":"0b83b19019fc0206e9b4603bad781e252e0671a9700d15a3d09565e58a7fd176"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d7d2b7344fe291496a9d51515c3c11cb3674235d8681cc420bd0cbea4385c0c2","downloaded_from":"2026-09-10T01:57:38.076Z","last_downloaded_at":"2026-09-10T01:57:38.076Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479639","source_sha256":"0b83b19019fc0206e9b4603bad781e252e0671a9700d15a3d09565e58a7fd176"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-40-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 842-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic; see Section 842-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59ac04d4f149d94f2f3f954b85f5e6aa16cd35b1ab55ae4ba091edaf238388fe","downloaded_from":"2026-09-10T01:57:40.869Z","last_downloaded_at":"2026-09-10T01:57:40.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479541","source_sha256":"eec9e4289e8935e5936d29ffb0560b5193e10cfa3bd694968a1adca0775dcf55"}},{"citation":"842-40-15-2","para":"15-2","html":"
If an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor) and leases that asset back from the buyer-lessor, both the seller-lessee and the buyer-lessor shall account for the transfer contract and the lease in accordance with Sections 842-40-25, 842-40-30, and 842-40-50.
","snippet":"If an entity (the seller-lessee) transfers an asset to another entity (the buyer-lessor) and leases that asset back from the buyer-lessor, both the seller-lessee and the buyer-lessor shall account for the transfer contra…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4d9d9180180726faa815939d3de93e144fc741c9d6664d5e3bf381102146e8eb","downloaded_from":"2026-09-10T01:57:40.869Z","last_downloaded_at":"2026-09-10T01:57:40.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479541","source_sha256":"eec9e4289e8935e5936d29ffb0560b5193e10cfa3bd694968a1adca0775dcf55"}},{"citation":"842-40-15-3","para":"15-3","html":"
See paragraphs
842-40-55-1 through 55-21
for implementation guidance on the scope of this Subtopic. See Example 3 (paragraphs
842-40-55-39 through 55-44
) for an illustration of the scope of this Subtopic.
","snippet":"See paragraphs 842-40-55-1 through 55-21 for implementation guidance on the scope of this Subtopic. See Example 3 (paragraphs 842-40-55-39 through 55-44) for an illustration of the scope of this Subtopic.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:eacf1a6bfc2b0e5af6eb65298222e64d1004e1200a2c2db8711d5e577aa5c74d","downloaded_from":"2026-09-10T01:57:40.869Z","last_downloaded_at":"2026-09-10T01:57:40.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479541","source_sha256":"eec9e4289e8935e5936d29ffb0560b5193e10cfa3bd694968a1adca0775dcf55"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e9536d5bc6a5cd8fe29b36416b555b94e9899e61b503e09f02ed48e74169dfb","downloaded_from":"2026-09-10T01:57:40.869Z","last_downloaded_at":"2026-09-10T01:57:40.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479541","source_sha256":"eec9e4289e8935e5936d29ffb0560b5193e10cfa3bd694968a1adca0775dcf55"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcbf1bfe3a648e6e04267613821be939ecbb105b41776cce3c14c457368792ee","downloaded_from":"2026-09-10T01:57:40.869Z","last_downloaded_at":"2026-09-10T01:57:40.869Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479541","source_sha256":"eec9e4289e8935e5936d29ffb0560b5193e10cfa3bd694968a1adca0775dcf55"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Determining Whether the Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-25-1","para":"25-1","html":"
An entity shall apply the following requirements in Topic 606 on revenue from contracts with customers when determining whether the transfer of an asset shall be accounted for as a sale of the asset:
  1. a
    Paragraphs
    606-10-25-1 through 25-8
    on the existence of a contract
  2. b
    Paragraph 606-10-25-30 on when an entity satisfies a performance obligation by transferring control of an asset.
","snippet":"An entity shall apply the following requirements in Topic 606 on revenue from contracts with customers when determining whether the transfer of an asset shall be accounted for as a sale of the asset:\n(a) Paragraphs 606-1…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:76f67e278fa607243c521c88ac3ad3459e89d998625cb1ce794c84a4f1d68e91","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"citation":"842-40-25-2","para":"25-2","html":"
The existence of a leaseback (that is, a seller-lessee's right to use the underlying asset for a period of time) does not, in isolation, prevent the buyer-lessor from obtaining control of the asset. However, the buyer-lessor is not considered to have obtained control of the asset in accordance with the guidance on when an entity satisfies a performance obligation by transferring control of an asset in Topic 606 if the leaseback would be classified as a finance lease or a sales-type lease.
","snippet":"The existence of a leaseback (that is, a seller-lessee's right to use the underlying asset for a period of time) does not, in isolation, prevent the buyer-lessor from obtaining control of the asset. However, the buyer-le…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:213efa2b2e6902f668c167a4e89ebb16d99d0c48bc853c6cc567eccccf1c2eb2","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"citation":"842-40-25-3","para":"25-3","html":"
An option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset unless both of the following criteria are met:
  1. a
    The exercise price of the option is the fair value of the asset at the time the option is exercised.
  2. b
    There are alternative assets, substantially the same as the transferred asset, readily available in the marketplace.
","snippet":"An option for the seller-lessee to repurchase the asset would preclude accounting for the transfer of the asset as a sale of the asset unless both of the following criteria are met:\n(a) The exercise price of the option i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:820ab1f74b3ff390ff24bb031781a77ca675b7f1bbef7f499940329a78b28ecc","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c643aae35afd7afcb8a75310510194065d0efccf15d297296b8cb564df6d0707","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"block":null,"heading":"Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-25-4","para":"25-4","html":"
If the transfer of the asset is a sale in accordance with paragraphs
842-40-25-1 through 25-3
, both of the following apply:
  1. a
    The seller-lessee shall:
    1. 1
      Recognize the transaction price for the sale at the point in time the buyer-lessor obtains control of the asset in accordance with paragraph 606-10-25-30 in accordance with the guidance on determining the transaction price in paragraphs
      606-10-32-2 through 32-27
    2. 2
      Derecognize the carrying amount of the underlying asset
    3. 3
      Account for the lease in accordance with Subtopic 842-20.
  2. b
    The buyer-lessor shall account for the purchase in accordance with other Topics and for the lease in accordance with Subtopic 842-30.
","snippet":"If the transfer of the asset is a sale in accordance with paragraphs 842-40-25-1 through 25-3, both of the following apply:\n(a) The seller-lessee shall:\n(1) Recognize the transaction price for the sale at the point in ti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5ff1f76476623a56dd2ca619b5817f0ff4fcf32791e60ed42fa34faacad9235","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f05d934aaf86a5fb3a0d5d0ca1ff8529e7dea3b6e2a9b19909666d00d628ee0b","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"block":null,"heading":"Transfer of the Asset Is Not a Sale","paragraphs":[{"citation":"842-40-25-5","para":"25-5","html":"
If the transfer of the asset is not a sale in accordance with paragraphs
842-40-25-1 through 25-3
, both of the following apply:
  1. a
    The seller-lessee shall not derecognize the transferred asset and shall account for any amounts received as a financial liability in accordance with other Topics.
  2. b
    The buyer-lessor shall not recognize the transferred asset and shall account for the amounts paid as a receivable in accordance with other Topics.
","snippet":"If the transfer of the asset is not a sale in accordance with paragraphs 842-40-25-1 through 25-3, both of the following apply:\n(a) The seller-lessee shall not derecognize the transferred asset and shall account for any …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6278c5de82b0106f1231e3f41fb8b736ddb3d87cf72cc122ee7eec21760600db","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:56e816e87020d2722d445dd9bfe412f7c576517f3757eaaeb18a0e1aeee68772","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c746684d649f1cf0ab25dc22b481823e36808cc54df9c5ed4eb9a1386b0ffa61","downloaded_from":"2026-09-10T01:57:45.371Z","last_downloaded_at":"2026-09-10T01:57:45.371Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479314","source_sha256":"70b2cbe40bcab1901d15f82504558c6be3022e2696902a0ca033ab8183f5ecee"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":"Transfer of the Asset Is a Sale","paragraphs":[{"citation":"842-40-30-1","para":"30-1","html":"
An entity shall determine whether a sale and leaseback transaction is at fair value on the basis of the difference between either of the following, whichever is more readily determinable:
  1. a
    The sale price of the asset and the fair value of the asset
  2. b
    The present value of the lease payments and the present value of market rental payments.
","snippet":"An entity shall determine whether a sale and leaseback transaction is at fair value on the basis of the difference between either of the following, whichever is more readily determinable:\n(a) The sale price of the asset …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95701c557e78c519952b8cb52eaa4d9df4f02e0590225fb083c7baa16e640f21","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-2","para":"30-2","html":"
If the sale and leaseback transaction is not at fair value, the entity shall adjust the sale price of the asset on the same basis the entity used to determine that the transaction was not at fair value in accordance with paragraph 842-40-30-1. The entity shall account for both of the following:
  1. a
    Any increase to the sale price of the asset as a prepayment of rent
  2. b
    Any reduction of the sale price of the asset as additional financing provided by the buyer-lessor to the seller-lessee. The seller-lessee and the buyer-lessor shall account for the additional financing in accordance with other Topics.
","snippet":"If the sale and leaseback transaction is not at fair value, the entity shall adjust the sale price of the asset on the same basis the entity used to determine that the transaction was not at fair value in accordance with…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:05fb83c8cc29a954dc411898315e818aa987e552d3f8e744cdf1be1ba4977bd8","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-3","para":"30-3","html":"
A sale and leaseback transaction is not off market solely because the sale price or the lease payments include a variable component. In determining whether the sale and leaseback transaction is at fair value, the entity should consider those variable payments it reasonably expects to be entitled to (or to make) on the basis of all of the information (historical, current, and forecast) that is reasonably available to the entity. For a seller-lessee, this would include estimating any variable consideration to which it expects to be entitled in accordance with paragraphs
606-10-32-5 through 32-9
.
","snippet":"A sale and leaseback transaction is not off market solely because the sale price or the lease payments include a variable component. In determining whether the sale and leaseback transaction is at fair value, the entity …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c5420ce05564a69e28ee8445114eab790e094cae79cb47ec5c6ab99da63b2a4","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-4","para":"30-4","html":"
If the transaction is a related party lease, an entity shall not make the adjustments required in paragraph 842-40-30-2, but shall provide the required disclosures as discussed in paragraphs 842-20-50-7 and 842-30-50-4.
","snippet":"If the transaction is a related party lease, an entity shall not make the adjustments required in paragraph 842-40-30-2, but shall provide the required disclosures as discussed in paragraphs 842-20-50-7 and 842-30-50-4.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:79daf7bcd439154e4ef242d483a4bd45c36f77c52cb605588bf556baefab987b","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"citation":"842-40-30-5","para":"30-5","html":"
See Examples 1 and 2 (paragraphs
842-40-55-22 through 55-38
) for illustrations of the requirements for a sale and leaseback transaction.
","snippet":"See Examples 1 and 2 (paragraphs 842-40-55-22 through 55-38) for illustrations of the requirements for a sale and leaseback transaction.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35ed03e1bddbf8f3f260bb89c96cc0d0b07a77304c29484499f369b0dacde2c4","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0940232f0d8d7dde888d1fae4a2c2e5f644e7f2fbf51a7889df81af1be5ca31c","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"block":null,"heading":"Transfer of the Asset Is Not a Sale","paragraphs":[{"citation":"842-40-30-6","para":"30-6","html":"
The guidance in paragraph 842-40-25-5 notwithstanding, the seller-lessee shall adjust the interest rate on its financial liability as necessary to ensure that both of the following apply:
  1. a
    Interest on the financial liability is not greater than the payments on the financial liability over the shorter of the lease term and the term of the financing. The term of the financing may be shorter than the lease term because the transfer of an asset that does not qualify as a sale initially may qualify as a sale at a point in time before the end of the lease term.
  2. b
    The carrying amount of the asset does not exceed the carrying amount of the financial liability at the earlier of the end of the lease term or the date at which control of the asset will transfer to the buyer-lessor (for example, the date at which a repurchase option expires if that date is earlier than the end of the lease term).
","snippet":"The guidance in paragraph 842-40-25-5 notwithstanding, the seller-lessee shall adjust the interest rate on its financial liability as necessary to ensure that both of the following apply:\n(a) Interest on the financial li…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:52e1f5d9148071eb2403222ac9be62db3afcf6aed98e800549cef5d33d61e477","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e3ef44155b25148dac721ac90d36bc5e750ce028c83e4085edb26aa1b521e93b","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7431503c4b832d7131977e41a8e23617bbc44d50ba630ce15d657e937a619b90","downloaded_from":"2026-09-10T01:57:48.887Z","last_downloaded_at":"2026-09-10T01:57:48.887Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479220","source_sha256":"5267d540d733e904401901f3cf1d0cdaa5e83b2208ac2bc59428938dfe20f40f"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-40-50-1","para":"50-1","html":"
If a seller-lessee or a buyer-lessor enters into a sale and leaseback transaction that is accounted for in accordance with paragraphs 842-40-25-4 and
842-40-30-1 through 30-3
, it shall provide the disclosures required in paragraphs
842-20-50-1 through 50-10
for a seller-lessee or paragraphs
842-30-50-1 through 50-13
for a buyer-lessor.
","snippet":"If a seller-lessee or a buyer-lessor enters into a sale and leaseback transaction that is accounted for in accordance with paragraphs 842-40-25-4 and 842-40-30-1 through 30-3, it shall provide the disclosures required in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:851b57d5e67e16c37f0992a98ec97026ea464e7bc95d6e3eb28e1e8927926389","downloaded_from":"2026-09-10T01:57:52.852Z","last_downloaded_at":"2026-09-10T01:57:52.852Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479741","source_sha256":"81790590d73855057d48c5a5807092e09148ba192afc2e006053fca59c7864a9"}},{"citation":"842-40-50-2","para":"50-2","html":"
In addition to the disclosures required by paragraphs
842-20-50-1 through 50-10
, a seller-lessee that enters into a sale and leaseback transaction shall disclose both of the following:
  1. a
    The main terms and conditions of that transaction
  2. b
    Any gains or losses arising from the transaction separately from gains or losses on disposal of other assets.
","snippet":"In addition to the disclosures required by paragraphs 842-20-50-1 through 50-10, a seller-lessee that enters into a sale and leaseback transaction shall disclose both of the following:\n(a) The main terms and conditions o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f1fa147eaaace317b7ca70e521f6ac4e944943d8b7b6706f97292ce281fa6d1b","downloaded_from":"2026-09-10T01:57:52.852Z","last_downloaded_at":"2026-09-10T01:57:52.852Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479741","source_sha256":"81790590d73855057d48c5a5807092e09148ba192afc2e006053fca59c7864a9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e363971d7c452f8fc1a01e9eedafa9b7481ae54bc3647514ea0e2126ba5a82a9","downloaded_from":"2026-09-10T01:57:52.852Z","last_downloaded_at":"2026-09-10T01:57:52.852Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479741","source_sha256":"81790590d73855057d48c5a5807092e09148ba192afc2e006053fca59c7864a9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5355a5803da93a42ba4eb48f8fdc27404887a8b5281183025d22b4ac4a89976","downloaded_from":"2026-09-10T01:57:52.852Z","last_downloaded_at":"2026-09-10T01:57:52.852Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479741","source_sha256":"81790590d73855057d48c5a5807092e09148ba192afc2e006053fca59c7864a9"}},{"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":"842-40-55-1","para":"55-1","html":"
A lessee may obtain legal title to the underlying asset before that legal title is transferred to the lessor and the asset is leased to the lessee. If the lessee controls the underlying asset (that is, it can direct its use and obtain substantially all of its remaining benefits) before the asset is transferred to the lessor, the transaction is a sale and leaseback transaction that is accounted for in accordance with this Subtopic.
","snippet":"A lessee may obtain legal title to the underlying asset before that legal title is transferred to the lessor and the asset is leased to the lessee. If the lessee controls the underlying asset (that is, it can direct its …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5f92875179c8f15e6f9260fb75381d7f585019cc8ca6b956af3bccbb1a713c07","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-2","para":"55-2","html":"
If the lessee obtains legal title, but does not obtain control of the underlying asset before the asset is transferred to the lessor, the transaction is not a sale and leaseback transaction. For example, this may be the case if a manufacturer, a lessor, and a lessee negotiate a transaction for the purchase of an asset from the manufacturer by the lessor, which in turn is leased to the lessee. For tax or other reasons, the lessee might obtain legal title to the underlying asset momentarily before legal title transfers to the lessor. In this case, if the lessee obtains legal title to the asset but does not control the asset before it is transferred to the lessor, the transaction is accounted for as a purchase of the asset by the lessor and a lease between the lessor and the lessee.
","snippet":"If the lessee obtains legal title, but does not obtain control of the underlying asset before the asset is transferred to the lessor, the transaction is not a sale and leaseback transaction. For example, this may be the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aaf58ad6a11146e5741b5a32902c779cd785758bcf0531116e5ad016e42b2fe3","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-3","para":"55-3","html":"
An entity may negotiate a lease before the underlying asset is available for use by the lessee. For some leases, the underlying asset may need to be constructed or redesigned for use by the lessee. Depending on the terms and conditions of the contract, a lessee may be required to make payments relating to the construction or design of the asset.
","snippet":"An entity may negotiate a lease before the underlying asset is available for use by the lessee. For some leases, the underlying asset may need to be constructed or redesigned for use by the lessee. Depending on the terms…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:61572ebbad6938d1573bf6f24346381848076d8b567224d73dc116ab70ac20b7","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-4","para":"55-4","html":"
If a lessee incurs costs relating to the construction or design of an underlying asset before the commencement date, the lessee should account for those costs in accordance with other Topics, for example, Topic 330 on inventory or Topic 360 on property, plant, and equipment. Costs relating to the construction or design of an underlying asset do not include payments made by the lessee for the right to use the underlying asset. Payments for the right to use the underlying asset are lease payments, regardless of the timing of those payments or the form of those payments (for example, a lessee might contribute construction materials for the asset under construction).
","snippet":"If a lessee incurs costs relating to the construction or design of an underlying asset before the commencement date, the lessee should account for those costs in accordance with other Topics, for example, Topic 330 on in…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d2418eaf426c3fedcb9de7e173f4e033528866dfbbfbf412f02b791a630f12a","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-5","para":"55-5","html":"
If the lessee controls the underlying asset being constructed before the commencement date, the transaction is accounted for in accordance with this Subtopic. Any one (or more) of the following would demonstrate that the lessee controls an underlying asset that is under construction before the commencement date:
  1. a
    The lessee has the right to obtain the partially constructed underlying asset at any point during the construction period (for example, by making a payment to the lessor).
  2. b
    The lessor has an enforceable right to payment for its performance to date, and the asset does not have an alternative use (see paragraph 842-10-55-7) to the owner-lessor. In evaluating whether the asset has an alternative use to the owner-lessor, an entity should consider the characteristics of the asset that will ultimately be leased.
  3. c
    The lessee legally owns either:
    1. 1
      Both the land and the property improvements (for example, a building) that are under construction
    2. 2
      The non-real-estate asset (for example, a ship or an airplane) that is under construction.
  4. d
    The lessee controls the land that property improvements will be constructed upon (this includes where the lessee enters into a transaction to transfer the land to the lessor, but the transfer does not qualify as a sale in accordance with paragraphs
    842-40-25-1 through 25-3
    ) and does not enter into a lease of the land before the beginning of construction that, together with renewal options, permits the lessor or another unrelated third party to lease the land for substantially all of the economic life of the property improvements.
  5. e
    The lessee is leasing the land that property improvements will be constructed upon, the term of which, together with lessee renewal options, is for substantially all of the economic life of the property improvements, and does not enter into a sublease of the land before the beginning of construction that, together with renewal options, permits the lessor or another unrelated third party to sublease the land for substantially all of the economic life of the property improvements.
The list of circumstances above in which a lessee controls an underlying asset that is under construction before the commencement date is not all inclusive. There may be other circumstances that individually or in combination demonstrate that a lessee controls an underlying asset that is under construction before the commencement date.
","snippet":"If the lessee controls the underlying asset being constructed before the commencement date, the transaction is accounted for in accordance with this Subtopic. Any one (or more) of the following would demonstrate that the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:834bccec682f4167d7209340529f36a3fbabda5637e87a43f0cc7b892dfc6f92","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-6","para":"55-6","html":"
See Example 3 (paragraphs
842-40-55-39 through 55-44
) for an illustration of the scope of this Subtopic.
","snippet":"See Example 3 (paragraphs 842-40-55-39 through 55-44) for an illustration of the scope of this Subtopic.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd5ddb8e826338e00559ad9b79c44d03976bdba54e87bc981f66c8a98fe25f41","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-7","para":"55-7","html":"
A provision that requires lessee indemnifications for preexisting environmental contamination does not, on its own, mean that the lessee controlled the underlying asset before the lease commenced regardless of the likelihood of loss resulting from the indemnity. Consequently, the presence of such a provision does not mean the transaction is in the scope of this Subtopic.
","snippet":"A provision that requires lessee indemnifications for preexisting environmental contamination does not, on its own, mean that the lessee controlled the underlying asset before the lease commenced regardless of the likeli…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0f1e23b488d33b449554537df0d445a7ebb015392025ef4e298c61f1bc7c1f52","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-8","para":"55-8","html":"
An entity owns an interest in an underlying asset and also is a lessee under an operating lease for all or a portion of the underlying asset. Acquisition of an ownership interest in the underlying asset and consummation of the lease occurred at or near the same time. This owner-lessee relationship can occur, for example, when the entity has an investment in a partnership that owns the underlying asset (or a larger asset of which the underlying asset is a distinct portion). The entity subsequently sells its interest or the partnership sells the underlying asset to an independent third party, and the entity continues to lease the underlying asset under the preexisting operating lease.
","snippet":"An entity owns an interest in an underlying asset and also is a lessee under an operating lease for all or a portion of the underlying asset. Acquisition of an ownership interest in the underlying asset and consummation …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:be477baff79af130b5245708cfe3bf410605ea60a681c5b963ce8248453a4d22","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-9","para":"55-9","html":"
A transaction should be subject to the guidance in this Subtopic if the scope or price of the preexisting lease is modified in connection with the sale. If the scope or the price of the preexisting lease is not modified in conjunction with the sale, the sale should be accounted for in accordance with other Topics.
","snippet":"A transaction should be subject to the guidance in this Subtopic if the scope or price of the preexisting lease is modified in connection with the sale. If the scope or the price of the preexisting lease is not modified …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ce9c7823c566ed786370b3b68b2851d472471fb442ae0f2aedaed9fe0a6aaaa","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-10","para":"55-10","html":"
A lease between parties under common control should not be considered a preexisting lease. Accordingly, the guidance in this Subtopic should be applied to transactions that include nonfinancial assets within its scope, except if Topic 980 on regulated operations applies. That is, if one of the parties under common control is a regulated entity with a lease that has been approved by the appropriate regulatory agency, that lease should be considered a preexisting lease.
","snippet":"A lease between parties under common control should not be considered a preexisting lease. Accordingly, the guidance in this Subtopic should be applied to transactions that include nonfinancial assets within its scope, e…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c24f9970e2985966a4ab35df334b96c900494a026232df91010e4242bc2ac3bd","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-11","para":"55-11","html":"
A U.S. entity purchases an asset and enters into a contract with a foreign investor that provides that foreign investor with an ownership right in, but not necessarily title to, the asset. That ownership right enables the foreign investor to claim certain benefits of ownership of the asset for tax purposes in the foreign tax jurisdiction.
","snippet":"A U.S. entity purchases an asset and enters into a contract with a foreign investor that provides that foreign investor with an ownership right in, but not necessarily title to, the asset. That ownership right enables th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:25d8770469d5b7358114af56590fc9e099637bb11d03743203383f1f1a4aa312","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-12","para":"55-12","html":"
The U.S. entity also enters into a contract in the form of a leaseback for the ownership right with the foreign investor. The contract contains a purchase option for the U.S. entity to acquire the foreign investor's ownership right in the asset at the end of the lease term.
","snippet":"The U.S. entity also enters into a contract in the form of a leaseback for the ownership right with the foreign investor. The contract contains a purchase option for the U.S. entity to acquire the foreign investor's owne…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a855ae8394eb29914d4620d608e11bae2545c7e16a7c8470daba56d8852d4097","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-13","para":"55-13","html":"
The foreign investor pays the U.S. entity an amount of cash on the basis of an appraised value of the asset. The U.S. entity immediately transfers a portion of that cash to a third party, and that third party assumes the U.S. entity's obligation to make the future lease payments, including the purchase option payment. The cash retained by the U.S. entity is consideration for the tax benefits to be obtained by the foreign investor in the foreign tax jurisdiction. The U.S. entity may agree to indemnify the foreign investor against certain future events that would reduce the availability of tax benefits to the foreign investor. The U.S. entity also may agree to indemnify the third-party trustee against certain future events.
","snippet":"The foreign investor pays the U.S. entity an amount of cash on the basis of an appraised value of the asset. The U.S. entity immediately transfers a portion of that cash to a third party, and that third party assumes the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6a24699e4b53f47212aa440714a3e8ffe2136f6156e0cabe7c982b3c2e26ff35","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-14","para":"55-14","html":"
The result of the transaction is that both the U.S. entity and the foreign investor have a tax basis in the same depreciable asset.
","snippet":"The result of the transaction is that both the U.S. entity and the foreign investor have a tax basis in the same depreciable asset.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:27e991f2a7dcd1c5e7594aa4886a1d198ce1dc6c26391022f1c31048e8d2a66b","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-15","para":"55-15","html":"
An entity should determine whether the transfer of the ownership right is a sale based on the guidance in paragraphs
842-40-25-1 through 25-3
. Consistent with paragraphs
842-40-25-2 through 25-3
, if the leaseback for the ownership right is a finance lease or if the U.S. entity has an option to repurchase the ownership right at any exercise price other than the fair value of that right on the exercise date, there is no sale. If the transfer of the ownership right is not a sale, consistent with the guidance in paragraph 842-40-25-5, the entity should account for the cash received from the foreign investor as a financial liability in accordance with other Topics.
","snippet":"An entity should determine whether the transfer of the ownership right is a sale based on the guidance in paragraphs 842-40-25-1 through 25-3. Consistent with paragraphs 842-40-25-2 through 25-3, if the leaseback for the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a941cea1af24f0e70d95e262fd3ff662bbd29118159b3c04773428c57731d20b","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-16","para":"55-16","html":"
If the transfer of the ownership right is a sale, income recognition for the cash received should be determined on the basis of individual facts and circumstances. Immediate income recognition is not appropriate if there is more than a remote possibility of loss of the cash consideration received because of indemnification or other contingencies.
","snippet":"If the transfer of the ownership right is a sale, income recognition for the cash received should be determined on the basis of individual facts and circumstances. Immediate income recognition is not appropriate if there…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54a3f919ce6e2f3faa2a1eda0eb9d3c42c8ede027f66c5b5907f8898db9d37f8","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-17","para":"55-17","html":"
The total consideration received by the U.S. entity is compensation for both the tax benefits and the indemnification of the foreign investor or other third-party trustee. The recognition of a liability for the indemnification agreement at inception in accordance with the guidance in Topic 460 on guarantees would reduce the amount of income related to the tax benefits that the seller-lessee would recognize immediately when the possibility of loss is remote.
","snippet":"The total consideration received by the U.S. entity is compensation for both the tax benefits and the indemnification of the foreign investor or other third-party trustee. The recognition of a liability for the indemnifi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c44385cea668b9193382bf95ffb3c5f4e270b683c6b8cdac5138940b304ef5b9","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-18","para":"55-18","html":"
An entity enters into a sale and leaseback of an asset that meets either of the following criteria:
  1. a
    The asset is subject to an operating lease.
  2. b
    The asset is subleased or intended to be subleased by the seller-lessee to another party under an operating lease.
","snippet":"An entity enters into a sale and leaseback of an asset that meets either of the following criteria:\n(a) The asset is subject to an operating lease.\n(b) The asset is subleased or intended to be subleased by the seller-les…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f909f17ddad6d13b1fbf19a53f038ec71a504466f6a94b640ff04081cdecadb5","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-19","para":"55-19","html":"
A sale-leaseback-sublease transaction is within the scope of this Subtopic. The existence of the sublease (that is, the operating lease in paragraph 842-40-55-18(a) or (b)) does not, in isolation, prevent the buyer-lessor from obtaining control of the asset in accordance with paragraphs
842-40-25-1 through 25-3
, nor does it prevent the seller-lessee from controlling the asset before its transfer to the buyer-lessor (that is, the seller-lessee is subject to the same requirements for determining whether the transfer of the asset is a sale as it would be without the sublease). All facts and circumstances should be considered in determining whether the buyer-lessor obtains control of the underlying asset from the seller-lessee in a sale-leaseback-sublease transaction.
","snippet":"A sale-leaseback-sublease transaction is within the scope of this Subtopic. The existence of the sublease (that is, the operating lease in paragraph 842-40-55-18(a) or (b)) does not, in isolation, prevent the buyer-lesso…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:851d22bf37abb0bd4a3d0916835f3b3a197239fb85ba85844f1be7cdcde4de1e","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-20","para":"55-20","html":"
The seller-lessee may guarantee to the lessor that the residual value will be a stipulated amount at the end of the lease term. If the transfer of the asset is a sale in accordance with paragraphs
842-40-25-1 through 25-3
, the seller-lessee residual value guarantee should be accounted for in the same manner as any other residual value guarantee provided by a lessee.
","snippet":"The seller-lessee may guarantee to the lessor that the residual value will be a stipulated amount at the end of the lease term. If the transfer of the asset is a sale in accordance with paragraphs 842-40-25-1 through 25-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b6e29a08185fc10dde7416a6c601844e84958bfa9285b6d89892ca65eea3c4e","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-21","para":"55-21","html":"
The residual value guarantee does not, on its own, preclude accounting for the transaction as a sale and leaseback, but should be considered in evaluating whether control of the asset has transferred to the buyer-lessor in accordance with paragraph 606-10-25-30. For example, a significant residual value guarantee by the seller-lessee may affect an entity's consideration of the transfer of control indicator in paragraph 606-10-25-30(d).
","snippet":"The residual value guarantee does not, on its own, preclude accounting for the transaction as a sale and leaseback, but should be considered in evaluating whether control of the asset has transferred to the buyer-lessor …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bb229e0a214dc2d9c2df4dab4e25d1823c69695f35144bcd9ea5a683d561028a","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6df27a209a661c5db025bd20b24fefb61b0271e1a676cf5b1a77613a7300dd01","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-40-55-22","para":"55-22","html":"
Examples 1 and 2 illustrate the accounting for sale and leaseback transactions.
","snippet":"Examples 1 and 2 illustrate the accounting for sale and leaseback transactions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:62689993e9794fe579698bcd7a0534c4498ccb78f26bbebf925d13d215bd3bec","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-23","para":"55-23","html":"
An entity (Seller) sells a piece of land to an unrelated entity (Buyer) for cash of $2 million. Immediately before the transaction, the land has a carrying amount of $1 million. At the same time, Seller enters into a contract with Buyer for the right to use the land for 10 years (the leaseback), with annual payments of $120,000 payable in arrears. This Example ignores any initial direct costs associated with the transaction. The terms and conditions of the transaction are such that Buyer obtains substantially all the remaining benefits of the land on the basis of the combination of the cash flows it will receive from Seller during the leaseback and the benefits that will be derived from the land at the end of the lease term. In determining that a sale occurs at commencement of the leaseback, Seller considers that, at that date, all of the following apply:
  1. a
    Seller has a present right to payment of the sales price of $2 million.
  2. b
    Buyer obtains legal title to the land.
  3. c
    Buyer has the significant risks and rewards of ownership of the land because, for example, Buyer has the ability to sell the land if the property value increases and also must absorb any losses, realized or unrealized, if the property value declines.
","snippet":"An entity (Seller) sells a piece of land to an unrelated entity (Buyer) for cash of $2 million. Immediately before the transaction, the land has a carrying amount of $1 million. At the same time, Seller enters into a con…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:183191bfc9816e4f4b19e8017d465d25c5dbc485c15a3d462eeca29da4a1bb05","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-24","para":"55-24","html":"
The observable fair value of the land at the date of sale is $1.4 million. Because the fair value of the land is observable, both Seller and Buyer utilize that benchmark in evaluating whether the sale is at market term. Because the sale is not at fair value (that is, the sales price is significantly in excess of the fair value of the land), both Seller and Buyer adjust for the off-market terms in accounting for the transaction. Seller recognizes a gain of $400,000 ($1.4 million - $1 million) on the sale of the land. The amount of the excess sale price of $600,000 ($2 million - $1.4 million) is recognized as additional financing from Buyer to Seller (that is, Seller is receiving the additional benefit of financing from Buyer). Seller's incremental borrowing rate is 6 percent. The leaseback is classified as an operating lease.
","snippet":"The observable fair value of the land at the date of sale is $1.4 million. Because the fair value of the land is observable, both Seller and Buyer utilize that benchmark in evaluating whether the sale is at market term. …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:93e3d66367d2fe92fd466486f713627b717354683639863225769460a9f1d3ec","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-25","para":"55-25","html":"
At the commencement date, Seller derecognizes the land with a carrying amount of $1 million. Seller recognizes the cash received of $2 million, a financial liability for the additional financing obtained from Buyer of $600,000, and a gain on sale of the land of $400,000. Seller also recognizes a lease liability for the leaseback at the present value of the portion of the 10 contractual leaseback payments attributable to the lease of $38,479 ($120,000 contractual lease payment - $81,521 of that lease payment that is attributable to the additional Buyer financing), discounted at the rate of 6 percent, which is $283,210, and a corresponding right-of-use asset of $283,210. The amount of $81,521 is the amount of each $120,000 annual payment that must be attributed to repayment of the principal of the financial liability for that financial liability to reduce to zero by the end of the lease term.
","snippet":"At the commencement date, Seller derecognizes the land with a carrying amount of $1 million. Seller recognizes the cash received of $2 million, a financial liability for the additional financing obtained from Buyer of $6…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e0ae6068494819e7b7dda04fc362e8c74f3cc22bb978a7b4ad6e727671c80b4a","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-26","para":"55-26","html":"
After initial recognition and measurement, at each period of the lease term, Seller will do both of the following:
  1. a
    Decrease the financing obligation for the amount of each lease payment allocated to that obligation (that is, $81,521) and increase the carrying amount of the obligation for interest accrued using Seller's incremental borrowing rate of 6 percent. For example, at the end of Year 1, the balance of the financial obligation is $554,479 ($600,000 - $81,521 + $36,000).
  2. b
    Recognize the interest expense on the financing obligation (for example, $36,000 in Year 1) and $38,479 in operating lease expense.
","snippet":"After initial recognition and measurement, at each period of the lease term, Seller will do both of the following:\n(a) Decrease the financing obligation for the amount of each lease payment allocated to that obligation (…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:26f4cbf307f2cfa84f4574b53a443364ae7bb40ac65e08d0aea65690cc8addeb","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-27","para":"55-27","html":"
At the end of the lease term, the financing obligation and the lease liability equal $0.
","snippet":"At the end of the lease term, the financing obligation and the lease liability equal $0.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1d0860e3f4b3cba9f9ce7f0f033a45ae6f71004754196d25cc64517ba04bf11c","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-28","para":"55-28","html":"
Also, at the commencement date, Buyer recognizes the land at a cost of $1.4 million and a financial asset for the additional financing provided to Seller of $600,000. Because the lease is an operating lease, at the date of sale Buyer does not do any accounting for the lease.
","snippet":"Also, at the commencement date, Buyer recognizes the land at a cost of $1.4 million and a financial asset for the additional financing provided to Seller of $600,000. Because the lease is an operating lease, at the date …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f5c272f4e9bdbba33f81592c9e0dbed9522d4c68824e8d737875e9c7623c4ee5","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-29","para":"55-29","html":"
In accounting for the additional financing to Seller, Buyer uses 6 percent as the applicable discount rate, which it determined in accordance with paragraphs
835-30-25-12 through 25-13
. Therefore, Buyer will allocate $81,521 of each lease payment to Buyer's financial asset and allocate the remaining $38,479 to lease income. After initial recognition and measurement at each period of the lease term, Buyer will do both of the following:
  1. a
    Decrease the financial asset for the amount of each lease payment received that is allocated to that obligation (that is, $81,521) and increase the carrying amount of the obligation for interest accrued on the financial asset using Seller's incremental borrowing rate of 6 percent. Consistent with Seller's accounting, at the end of Year 1, the carrying amount of the financial asset is $554,479 ($600,000 - $81,521 + $36,000).
  2. b
    Recognize the interest income on the financing obligation (for example, $33,269 in Year 2) and $38,479 in operating lease income.
","snippet":"In accounting for the additional financing to Seller, Buyer uses 6 percent as the applicable discount rate, which it determined in accordance with paragraphs 835-30-25-12 through 25-13. Therefore, Buyer will allocate $81…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7c58676ec26c86096cb92a2f93dc19ba44d7c85519094a492b6c9ea518d90bdd","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-30","para":"55-30","html":"
At the end of the lease term, the carrying amount of the financial asset is $0, and Buyer continues to recognize the land.
","snippet":"At the end of the lease term, the carrying amount of the financial asset is $0, and Buyer continues to recognize the land.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:379e3692a3dc650c607e4736a5f1ea75b6b4bebaa9f32675afca8247d08a45b6","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-31","para":"55-31","html":"
An entity (Seller) sells an asset to an unrelated entity (Buyer) for cash of $2 million. Immediately before the transaction, the asset has a carrying amount of $1.8 million and has a remaining useful life of 21 years. At the same time, Seller enters into a contract with Buyer for the right to use the asset for 8 years with annual payments of $200,000 payable at the end of each year and no renewal options. Seller's incremental borrowing rate at the date of the transaction is 4 percent. The contract includes an option to repurchase the asset at the end of Year 5 for $800,000.
","snippet":"An entity (Seller) sells an asset to an unrelated entity (Buyer) for cash of $2 million. Immediately before the transaction, the asset has a carrying amount of $1.8 million and has a remaining useful life of 21 years. At…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:15b19d54472d8e21ecb54bc436342145a84fc47bdf354d66c26365dba9308ca3","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-32","para":"55-32","html":"
The exercise price of the repurchase option is fixed and, therefore, is not the fair value of the asset on the exercise date of the option. Consequently, the repurchase option precludes accounting for the transfer of the asset as a sale. Absent the repurchase option, there are no other factors that would preclude accounting for the transfer of the asset as a sale.
","snippet":"The exercise price of the repurchase option is fixed and, therefore, is not the fair value of the asset on the exercise date of the option. Consequently, the repurchase option precludes accounting for the transfer of the…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9d692b9d65ca9a65aa3966e77e5d87b39c44f525a4e139a23d44931cab74d4a6","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-33","para":"55-33","html":"
Therefore, at the commencement date, Seller accounts for the proceeds of $2 million as a financial liability and continues to account for the asset. Buyer accounts for the payment of $2 million as a financial asset and does not recognize the transferred asset. Seller accounts for its financing obligation, and Buyer accounts for its financial asset in accordance with other Topics, except that, in accordance with paragraph 842-40-30-6, Seller imputes an interest rate (4.23 percent) to ensure that interest on the financial liability is not greater than the payments on the financial liability over the shorter of the lease term and the term of the financing and that the carrying amount of the asset will not exceed the financial liability at the point in time the repurchase option expires (that is, at the point in time Buyer will obtain control of the asset in accordance with the guidance on satisfying performance obligations in Topic 606). Paragraph 842-40-30-6 does not apply to the buyer-lessor; therefore, Buyer recognizes interest income on its financial asset on the basis of the imputed interest rate determined in accordance with paragraphs
835-30-25-12 through 25-13
, which in this case Buyer determines to be 4 percent.
","snippet":"Therefore, at the commencement date, Seller accounts for the proceeds of $2 million as a financial liability and continues to account for the asset. Buyer accounts for the payment of $2 million as a financial asset and d…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5a1f38886886f713f066ec09610e393f1032587851ffc213aef843533710ae0c","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-34","para":"55-34","html":"
During Year 1, Seller recognizes interest expense of $84,600 (4.23% × $2 million) and recognizes the payment of $200,000 as a reduction of the financial liability. Seller also recognizes depreciation expense of $85,714 ($1.8 million ÷ 21 years). Buyer recognizes interest income of $80,000 (4% × $2 million) and recognizes the payment of $200,000 as a reduction of its financial asset.
","snippet":"During Year 1, Seller recognizes interest expense of $84,600 (4.23% × $2 million) and recognizes the payment of $200,000 as a reduction of the financial liability. Seller also recognizes depreciation expense of $85,714 (…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6d9568a2f83bac1ec86c6b6c295bc7c87847709c385230e7c434f70503bf8cc3","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-35","para":"55-35","html":"
At the end of Year 1, the carrying amount of Seller's financial liability is $1,884,600 ($2 million + $84,600 - $200,000), and the carrying amount of the underlying asset is $1,714,286 ($1.8 million - $85,714). The carrying amount of Buyer's financial asset is $1,880,000 ($2 million + $80,000 - $200,000).
","snippet":"At the end of Year 1, the carrying amount of Seller's financial liability is $1,884,600 ($2 million + $84,600 - $200,000), and the carrying amount of the underlying asset is $1,714,286 ($1.8 million - $85,714). The carry…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4dd85644f71b628766eeb03c0dd1f14726dc98e8300c3db86c114378aa67969f","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-36","para":"55-36","html":"
At the end of Year 5, the option to repurchase the asset expires, unexercised by Seller. The repurchase option was the only feature of the arrangement that precluded accounting for the transfer of the asset as a sale. Therefore, upon expiration of the repurchase option, Seller recognizes the sale of the asset by derecognizing the carrying amount of the financial liability of $1,372,077, derecognizing the carrying amount of the underlying asset of $1,371,429, and recognizing a gain of $648. Buyer recognizes the purchase of the asset by derecognizing the carrying amount of its financial asset of $1,350,041 and recognizes the transferred asset at that same amount. The date of sale also is the commencement date of the leaseback for accounting purposes. The lease term is 3 years (8 year contractual leaseback term - 5 years already passed at the commencement date). Therefore, Seller recognizes a lease liability at the present value of the 3 remaining contractual leaseback payments of $200,000, discounted at Seller's incremental borrowing rate at the contractually stated commencement date of 4 percent, which is $555,018, and a corresponding right-of-use asset of $555,018. Seller uses the incremental borrowing rate as of the contractual commencement date because that rate more closely reflects the interest rate that would have been considered by Buyer in pricing the lease.
","snippet":"At the end of Year 5, the option to repurchase the asset expires, unexercised by Seller. The repurchase option was the only feature of the arrangement that precluded accounting for the transfer of the asset as a sale. Th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:719ee1dc4b11cbba924979a470d44338488c675ab7c5e2df57d7e00cf62cc00a","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-37","para":"55-37","html":"
The lease is classified as an operating lease by both Seller and Buyer. Consequently, in Year 6 and each year thereafter, Seller recognizes a single lease cost of $200,000, while Buyer recognizes lease income of $200,000 and depreciation expense of $84,378 on the underlying asset ($1,350,041 ÷ 16 years remaining useful life).
","snippet":"The lease is classified as an operating lease by both Seller and Buyer. Consequently, in Year 6 and each year thereafter, Seller recognizes a single lease cost of $200,000, while Buyer recognizes lease income of $200,000…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8e6b36845a91e159182b7fec3869ee8ed2b39c04ca9a271dc32947e6375e6b73","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-38","para":"55-38","html":"
At the end of Year 6 and at each reporting date thereafter, Seller calculates the lease liability at the present value of the remaining lease payments of $200,000, discounted at Seller's incremental borrowing rate of 4 percent. Because Seller does not incur any initial direct costs and there are no prepaid or accrued lease payments, Seller measures the right-of-use asset at an amount equal to the lease liability at each reporting date for the remainder of the lease term.
","snippet":"At the end of Year 6 and at each reporting date thereafter, Seller calculates the lease liability at the present value of the remaining lease payments of $200,000, discounted at Seller's incremental borrowing rate of 4 p…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f715a3b0d7ccd33e13581b41c37e541f81d1e1bfac273ba1d38f0190130799ee","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-39","para":"55-39","html":"
Example 3 illustrates the guidance on determining whether a lessee controls an underlying asset that is under construction before the commencement date.
","snippet":"Example 3 illustrates the guidance on determining whether a lessee controls an underlying asset that is under construction before the commencement date.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71d9f3ce7285029215fe2f56b63815b55cadd8fd1d719eaa4f656c232e32d515","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-40","para":"55-40","html":"
Lessee and Lessor enter into a contract whereby Lessor will construct (whether itself or using subcontractors) a building to Lessee's specifications and lease that building to Lessee for a period of 20 years once construction is completed for an annual lease payment of $1,000,000, increasing by 5 percent per year, plus a percentage of any overruns above the budgeted cost to construct the building. The building is expected to have an economic life of 50 years once it is constructed. Lessee does not legally own the building and does not have a right under the contract to obtain the building while it is under construction (for example, a right to purchase the construction in process from Lessor). In addition, while the building is being developed to Lessee's specifications, those specifications are not so specialized that the asset does not have an alternative use to Lessor.
","snippet":"Lessee and Lessor enter into a contract whereby Lessor will construct (whether itself or using subcontractors) a building to Lessee's specifications and lease that building to Lessee for a period of 20 years once constru…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:23a1850643b762d46f3fe3e2313e42031db3f9cf295bb7a8ceaba0187ab97ea1","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-41","para":"55-41","html":"
Assume Lessee controls (that is, Lessee is the owner for accounting purposes) the land upon which the building will be constructed and, as part of the contract, Lessee agrees to lease the underlying land to Lessor for an initial period of 25 years. Lessor also is granted a series of six 5-year renewal options for the land lease.
","snippet":"Assume Lessee controls (that is, Lessee is the owner for accounting purposes) the land upon which the building will be constructed and, as part of the contract, Lessee agrees to lease the underlying land to Lessor for an…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:64b80d22c264711f12e1367b961ce33989097129d36a916157faf36b3c4065db","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-42","para":"55-42","html":"
None of the circumstances in paragraph 842-40-55-5 exist. Even though Lessee owns the land (whether legally or for accounting purposes only) upon which the building will be constructed, Lessor legally owns the property improvements and has rights to use the underlying land for at least substantially all of the economic life of the building. Lessee does not own the building and does not have a right under the contract to obtain the building (for example, a right to purchase the building from Lessor). In addition, the building has an alternative use to Lessor. Therefore, Lessee does not control the building under construction. Consequently, the arrangement is not within the scope of this Subtopic. Lessee and Lessor will account for the lease of the building in accordance with Subtopics 842-20 and 842-30, respectively. If Lessee incurs costs related to the construction or design of the building (for example, architectural services in developing the specifications of the building), it will account for those costs as lease payments unless the costs are for goods or services provided to Lessee, in which case Lessee will account for those costs in accordance with other Topics.
","snippet":"None of the circumstances in paragraph 842-40-55-5 exist. Even though Lessee owns the land (whether legally or for accounting purposes only) upon which the building will be constructed, Lessor legally owns the property i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4df007dc858182ed16fff81b023358f0708c85842ee55d02e95ac44d528a3959","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-43","para":"55-43","html":"
Assume Lessee leases, rather than owns, the land upon which the building will be constructed. Lessee has a 20-year lease of the underlying land and five 10-year renewal options. Therefore, Lessee's lease of the underlying land, together with the renewal options, is for at least substantially all of the economic life of the building under construction. Lessee enters into a sublease with Lessor for the right to use the underlying land for 20 years that commences upon completion of the building. The sublease has a single 10-year renewal option available to Lessor.
","snippet":"Assume Lessee leases, rather than owns, the land upon which the building will be constructed. Lessee has a 20-year lease of the underlying land and five 10-year renewal options. Therefore, Lessee's lease of the underlyin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:960800deaf10629dcd05594f1613a5c185ac13c5389447c9dad98e583cae210b","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}},{"citation":"842-40-55-44","para":"55-44","html":"
Lessee controls the building during the construction period and, therefore, the arrangement is within the scope of this Subtopic. Lessee and Lessor will apply the guidance in this Subtopic to determine whether this arrangement qualifies as a sale and a leaseback or whether this arrangement is, instead, a financing arrangement. Lessee controls the building during the construction period because, in accordance with paragraph 842-40-55-5(e), Lessee controls the use of the land upon which the building will be constructed for a period that is at least substantially all of the economic life of the building and the sublease entered into with Lessor does not both (a) grant Lessor the right to use the land before the beginning of construction and (b) permit Lessor to use the land for substantially all the economic life of the building (that is, the sublease, including Lessor renewal options, only is for 30 years as compared with the 50-year economic life of the building).
","snippet":"Lessee controls the building during the construction period and, therefore, the arrangement is within the scope of this Subtopic. Lessee and Lessor will apply the guidance in this Subtopic to determine whether this arran…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c8591b4fbf100cf424d7044d45c10d8b17257ac59d8b1528762d97d4755e0a40","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58cf433ab73f421e2794b3c7b2420004272be7d20f10b0e9a069f0cc6cd3e753","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58be0696b961b48d593d9a722d542df207739cbc66eeb863d563de1a73621368","downloaded_from":"2026-09-10T01:57:56.244Z","last_downloaded_at":"2026-09-10T01:57:56.244Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479647","source_sha256":"82bd63b7d8ed889a19fe16d96227f245f60b9e176471ad3dccaacff91edc7ba5"}}],"enrichment":{"summary":"ASC 842-40 governs sale and leaseback transactions, in which a seller-lessee transfers an asset to a buyer-lessor and leases it back. The threshold question is whether the transfer qualifies as a sale under Topic 606's control-transfer guidance; if it does, the seller-lessee derecognizes the asset, recognizes the sale at the transaction price, and accounts for the leaseback under 842-20, while the buyer-lessor accounts for the purchase under other Topics and the lease under 842-30. If the transfer is not a sale (e.g., the leaseback is a finance/sales-type lease or there is a non-fair-value repurchase option), the transaction is a failed sale accounted for as a financing by both parties.","key_points":["Whether a transfer is a sale is determined using Topic 606's contract-existence guidance (606-10-25-1 through 25-8) and the transfer-of-control guidance in 606-10-25-30 (842-40-25-1).","A leaseback alone does not prevent the buyer-lessor from obtaining control, but the buyer-lessor is deemed not to have obtained control if the leaseback would be classified as a finance lease or sales-type lease (842-40-25-2).","A seller-lessee repurchase option precludes sale accounting unless (a) the exercise price is the fair value of the asset at exercise and (b) substantially the same alternative assets are readily available in the marketplace (842-40-25-3).","If a sale occurs, the seller-lessee recognizes the transaction price and derecognizes the asset's carrying amount and applies 842-20 to the leaseback; the buyer-lessor applies other Topics to the purchase and 842-30 to the lease (842-40-25-4).","If the transfer is not a sale, the seller-lessee keeps the asset and records proceeds as a financial liability while the buyer-lessor records a receivable (842-40-25-5), with the seller-lessee imputing an interest rate so interest does not exceed the payments and the asset's carrying amount does not exceed the liability when control transfers (842-40-30-6).","Off-market terms are adjusted by comparing sale price to fair value or PV of lease payments to PV of market rents; an excess sale price is a prepayment of rent and a reduction is additional financing from the buyer-lessor (842-40-30-1 through 30-3), except for related party leases (842-40-30-4).","If a lessee controls an asset under construction before the commencement date (indicators in 842-40-55-5, e.g., a right to obtain the partially constructed asset, legal ownership, or control of the land for substantially all the improvements' economic life), the arrangement is within this Subtopic; the seller-lessee must also disclose the main terms and any gains or losses separately (842-40-50-2)."],"categories":["Leases","Recognition","Derecognition","Revenue"],"audience_level":"intermediate","student_note":"Exams love the two trip-wires that kill sale accounting: a leaseback classified as a finance/sales-type lease and a fixed-price repurchase option. A common misunderstanding is that a failed sale means no lease accounting at all — in fact the seller-lessee keeps the asset and books a financing liability, and lease accounting begins only later if and when control transfers (e.g., when the repurchase option expires).","related_topics":["842-10","842-20","842-30","606-10","360","835-30"],"key_concepts":["sale and leaseback","transfer of control","failed sale financing","repurchase option","off-market terms","lessee control during construction","seller-lessee","buyer-lessor"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fccf4accf8967493abd9f92fa07ede96a9c0defc8807d467a0df1f24f8f8d5fc","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-30","title":"Lessor","topic_title":"Leases","score":0.8061,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:953cbfd7b8cc3a765e54f398c2be57bd8d5ef0a50317b71ae4100f5e8cf52652","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-10","title":"Overall","topic_title":"Leases","score":0.7536,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ff7f469fa80cb118ab03cc2db5126fa679a1fbc5ded33a78d71ff0abc0a5b592","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.7518,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7d1f9c9ab30b08ce636f2b0d66f75a6611432f0a24afca8531bf5fb48c1a4a8b","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"610-20","title":"Gains and Losses from the Derecognition of Nonfinancial Assets","topic_title":"Other Income","score":0.722,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04b38fcd2d98c071a66309055f36600ff6b7a23146d0be8cb39f2f8c075cdba7","downloaded_from":"2026-09-10T00:54:49.448Z","last_downloaded_at":"2026-09-10T00:55:14.020Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","score":0.7055,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4a3f0373ef927b1748ac4652b9b63359be19c2e5d330fdadc46c1227219e0204","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","score":0.7016,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:22b0cf9095d6ad867e63e4445519478f44628781c01cc7abe03b7fe4b6840351","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-30","title":"Lessor","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:72190b2f30acb725ba4deb724c68c45b4105df590acfe74be93ed48c20365c2b","downloaded_from":"2026-09-10T01:57:05.183Z","last_downloaded_at":"2026-09-10T01:57:33.589Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f38970d4835427ff54d1369708eb5bed085bbcb10e16255d2902107363dfefdd","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7444bd274af2ec6ceac557613bc51cf1d1b4ff44d31a796456445a29c39b18a6","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","topic":"842","title":"Leveraged Lease Arrangements","area":"Broad Transactions","paragraphs":70,"summary":"ASC 842-50 preserves the legacy leveraged lease accounting model, but only for leases that existed at the ASC 842 transition date and meet the criteria in 842-10-65-1(z) — no new leveraged leases may be created. A lessor records a single net investment consisting of rentals receivable (net of nonrecourse debt service), investment-tax-credit receivable, estimated residual value, and unearned/deferred income (842-50-25-1; 842-50-30-1), and recognizes income only in years when the net investment (less related deferred taxes) is positive, using the rate of return that distributes total net income to those years (842-50-35-2). Important assumptions, including residual value and the projected timing of income tax cash flows, must be reviewed at least annually, with any change triggering recalculation from lease inception and immediate gain or loss recognition (842-50-35-6 through 35-8).","concepts":["leveraged lease","net investment in leveraged lease","nonrecourse debt","unearned and deferred income","investment tax credit","residual value review and recalculation","rate of return on positive net investment years","deferred taxes on leveraged leases"],"categories":["Leases","Subsequent measurement","Income taxes","Presentation"],"level":"advanced","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
AcquireeAddedAccounting Standards Update No. 2016-0202/25/2016
AcquirerAmendedAccounting Standards Update No. 2025-0305/12/2025
AcquirerAddedAccounting Standards Update No. 2016-0202/25/2016
Acquisition by a Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
BusinessAmendedAccounting Standards Update No. 2017-0101/05/2017
BusinessAddedAccounting Standards Update No. 2016-0202/25/2016
Business CombinationAddedAccounting Standards Update No. 2016-0202/25/2016
Commencement Date of the Lease (Commencement Date)AddedAccounting Standards Update No. 2016-0202/25/2016
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Corporate Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
Delayed Equity InvestmentAddedAccounting Standards Update No. 2016-0202/25/2016
Estimated Residual ValueAddedAccounting Standards Update No. 2016-0202/25/2016
Fair Value (2nd def.)AddedAccounting Standards Update No. 2016-0202/25/2016
Joint VentureAddedAccounting Standards Update No. 2023-0508/23/2023
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Lease InceptionAddedAccounting Standards Update No. 2016-0202/25/2016
Lease ModificationAddedAccounting Standards Update No. 2016-0202/25/2016
Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Lease TermAddedAccounting Standards Update No. 2016-0202/25/2016
Legal EntityAddedAccounting Standards Update No. 2016-0202/25/2016
LesseeAddedAccounting Standards Update No. 2016-0202/25/2016
LessorAddedAccounting Standards Update No. 2016-0202/25/2016
Leveraged LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Market ParticipantsAddedAccounting Standards Update No. 2016-0202/25/2016
Minimum Lease PaymentsAddedAccounting Standards Update No. 2016-0202/25/2016
Not-for-Profit EntityAddedAccounting Standards Update No. 2016-0202/25/2016
Orderly TransactionAddedAccounting Standards Update No. 2016-0202/25/2016
Related PartiesAddedAccounting Standards Update No. 2016-0202/25/2016
Underlying AssetAddedAccounting Standards Update No. 2016-0202/25/2016
Variable Interest EntitySupersededAccounting Standards Update No. 2025-0305/12/2025
Variable Interest EntityAddedAccounting Standards Update No. 2016-0202/25/2016
842-50-05-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-15-1AmendedAccounting Standards Update No. 2023-0508/23/2023
842-50-15-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-25-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-25-2AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-30-1AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-30-2AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-35-1 through 35-21
AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-45-3AmendedAccounting Standards Update No. 2023-0508/23/2023
842-50-45-1 through 45-3
AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-50-1 through 50-3
AddedAccounting Standards Update No. 2016-0202/25/2016
842-50-50-2AmendedAccounting Standards Update No. 2022-0203/31/2022
842-50-50-2AmendedAccounting Standards Update No. 2016-1306/16/2016
842-50-55-1 through 55-33
AddedAccounting Standards Update No. 2016-0202/25/2016
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\nAcquiree | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nAcquirer | Amended | A…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:824204f9086532dd319d4ef9962b943d09277ccb1e5308fca7a1ea00aae40350","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa45b09d3595dd68121749149de5281a53d6fc50e22f963b2db1a61107cdc2cb","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:32e8ff10f1521a8299d7c7e973e3b7a3ddea4c0bbcf360b43743f3a01fcb7451","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:02.364Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479738","source_sha256":"5325a8ae18c9ca001c412e7d354771ba94052da0d9ee0abda801ed9b907fb9f1"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-05-1","para":"05-1","html":"
This Subtopic addresses accounting for leases that meet the definition of a leveraged lease.
","snippet":"This Subtopic addresses accounting for leases that meet the definition of a leveraged lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5e50f6fc71ae0cdf45f16b9990c2e08d915d92ea65b37fecc3266f58052e2a10","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b67cd83416da15b5c247020ca1e729cc8f25664d4575ecece0b936bf258f76d0","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ec196847912d47db51f085fb8e2623efa7196d7d2b4d58f078e891f3719a4a95","downloaded_from":"2026-09-10T01:58:06.448Z","last_downloaded_at":"2026-09-10T01:58:06.448Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479610","source_sha256":"48192afc224ec41c565591e127dac1bdc0cefb2ebd2c2592e028512810ccbf1a"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-15-1","para":"15-1","html":"
This Subtopic addresses accounting for leases that meet the criteria in transition paragraph 842-10-65-1(z). If a lessee exercises an option to extend a lease that meets the criteria in transition paragraph 842-10-65-1(z) that it was not previously reasonably assured of exercising, the exercise of that option shall be considered a lease modification as described in paragraph 842-10-65-1(z). A joint venture formation accounted for in accordance with Subtopic 805-60 shall apply the guidance in this Subtopic applicable to the acquiring entity in a business combination. The joint venture shall be viewed as analogous to the acquiring entity in a business combination, and any recognized businesses and/or assets shall be viewed as analogous to an acquiree.
","snippet":"This Subtopic addresses accounting for leases that meet the criteria in transition paragraph 842-10-65-1(z). If a lessee exercises an option to extend a lease that meets the criteria in transition paragraph 842-10-65-1(z…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:7e49666ba02522fc00a7bf7e893b48f5f075467e2dd72c0705a10e9055284741","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:022ff34e5f9b5f9daef915e60ea9bffea31e5257ccb6abd5a59433eda039778e","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9091a875609c6873c56a2833ded3b03f163fc1ec71616972bac8a49c2bdec815","downloaded_from":"2026-09-10T01:58:09.284Z","last_downloaded_at":"2026-09-10T01:58:09.284Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479509","source_sha256":"cf58fb3f827c243d7229c245eb568baf4ad951181b548b1cedb12436a26768ba"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-25-1","para":"25-1","html":"
A lessor shall record its investment in a leveraged lease. The net of the balances of the following accounts as measured in accordance with this Subtopic shall represent the lessor's initial and continuing investment in leveraged leases:
  1. a
    Rentals receivable
  2. b
    Investment-tax-credit receivable
  3. c
    Estimated residual value of the leased asset
  4. d
    Unearned and deferred income.
","snippet":"A lessor shall record its investment in a leveraged lease. The net of the balances of the following accounts as measured in accordance with this Subtopic shall represent the lessor's initial and continuing investment in …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5ef10122a14a0897a8161e382d0561450ba5c9bea3b10a082eccb211aa4b73a7","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3bc53caf5e92655c75ae0eb7ab2d9b8946213f0662a3c1bef8d9974cf1b98f51","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}},{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-25-2","para":"25-2","html":"
In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall retain the classification of the acquired entity's investment as a lessor in a leveraged lease at the date of the combination. The net investment of the acquired leveraged lease shall be disaggregated into its component parts, namely net rentals receivable, estimated residual value, and unearned income including discount to adjust other components to present value.
","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall retain the classification of the acquired entity's investment as a lessor in a leveraged lease at the date of the combina…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcf5486765ef126e63678be1a6a9c3a9802a5129cbf724e32213a858e4ac4f4d","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6c858352af35080d010d21029a72a4916d386e7fc7eea5498ac7beb05191dcaa","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d6d6d1aff1ea242d159b738fda0edba6b1e16d4b591e396b2f0af0946dfd2a51","downloaded_from":"2026-09-10T01:58:14.003Z","last_downloaded_at":"2026-09-10T01:58:14.003Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479295","source_sha256":"6691285f4592d371b22f1cab48c1b65908db9022ce7470262ce1eddf1434a820"}},{"number":"30","label":"30 Initial Measurement","anchor":"30-initial-measurement","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-30-1","para":"30-1","html":"
A lessor shall initially measure its investment in a leveraged lease net of the nonrecourse debt (as discussed in paragraph 842-50-25-1). The net of the balances of the following accounts shall represent the initial and continuing investment in leveraged leases:
  1. a
    Rentals receivable, net of that portion of the rental applicable to principal and interest on the nonrecourse debt.
  2. b
    A receivable for the amount of the investment tax credit to be realized on the transaction.
  3. c
    The estimated residual value of the leased asset. The estimated residual value shall not exceed the amount estimated at lease inception except if the lease agreement includes a provision to escalate minimum lease payments either for increases in construction or acquisition cost of the leased property or for increases in some other measure of cost or value (such as general price levels) during the construction or preacquisition period. In that case, the effect of any increases that have occurred shall be considered in the determination of the estimated residual value of the underlying asset at lease inception.
  4. d
    Unearned and deferred income consisting of both of the following:
    1. 1
      The estimated pretax lease income (or loss), after deducting initial direct costs, remaining to be allocated to income over the lease term.
    2. 2
      The investment tax credit remaining to be allocated to income over the lease term.
","snippet":"A lessor shall initially measure its investment in a leveraged lease net of the nonrecourse debt (as discussed in paragraph 842-50-25-1). The net of the balances of the following accounts shall represent the initial and …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:36a6a9267ca1e3e84004aeaced6fa3676e9e63d8c81018e9e9797b92d0caac88","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5a7ba8628d05f3a7a1225c3b7090276b3ee599408c8267bc5b91ffc6d0fac604","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}},{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-30-2","para":"30-2","html":"
In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall assign an amount to the acquired net investment in the leveraged lease in accordance with the general guidance in Topic 805 on business combinations, based on the remaining future cash flows and giving appropriate recognition to the estimated future tax effects of those cash flows.
","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall assign an amount to the acquired net investment in the leveraged lease in accordance with the general guidance in Topic 8…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1239fc68480830a99be35ad248e72b4e1a781f22f87c7557329022cf34bb3156","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c7dafc50502aaeb2b8598a09bd647d812c494bd093e5950eb94a0256b48a855","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a32f47f93a93fffd1cc85153863344c0113248d89087a3845c10a93d2717c517","downloaded_from":"2026-09-10T01:58:17.067Z","last_downloaded_at":"2026-09-10T01:58:17.067Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479193","source_sha256":"6aa9a7cc6f14a44bc81a961bf1053716ef337aba90521ce3925d05e0789d2bc5"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Leveraged Lease Acquired in a Business Combination or an Acquisition by a Not-for-Profit Entity","paragraphs":[{"citation":"842-50-35-1","para":"35-1","html":"
In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall subsequently account for its acquired investment as a lessor in a leveraged lease in accordance with the guidance in this Subtopic as it would for any other leveraged lease.
","snippet":"In a business combination or an acquisition by a not-for-profit entity, the acquiring entity shall subsequently account for its acquired investment as a lessor in a leveraged lease in accordance with the guidance in this…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3b400b32de60753a2b15d267a65f4ccafb35eaf71859f3b984bb0d9ad7c6040c","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2ef8fdbc6ef8abc5d03d8240add271cd81fa030b30ff79011385fe227c827fa2","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Income Recognition on a Leveraged Lease","paragraphs":[{"citation":"842-50-35-2","para":"35-2","html":"
The investment in leveraged leases minus deferred taxes arising from differences between pretax accounting income and taxable income shall represent the lessor's net investment in leveraged leases for purposes of computing periodic net income from the leveraged lease. Given the original investment and using the projected cash receipts and disbursements over the term of the lease, the rate of return on the net investment in the years in which it is positive shall be computed. The rate is that rate that, when applied to the net investment in the years in which the net investment is positive, will distribute the net income to those years and is distinct from the interest rate implicit in the lease. In each year, whether positive or not, the difference between the net cash flow and the amount of income recognized, if any, shall serve to increase or reduce the net investment balance. The use of the term years is not intended to preclude application of the accounting prescribed in this paragraph to shorter accounting periods.
","snippet":"The investment in leveraged leases minus deferred taxes arising from differences between pretax accounting income and taxable income shall represent the lessor's net investment in leveraged leases for purposes of computi…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0aef6b2b8ef64adb51a14e9c9bc9eee6b162e9090f39d03b7396560b7ce83448","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-3","para":"35-3","html":"
The net income (or loss) that a lessor recognizes on a leveraged lease shall be composed of the following three elements:
  1. a
    Pretax lease income (or loss)
  2. b
    Investment tax credit
  3. c
    Tax effect of pretax lease income (or loss).
","snippet":"The net income (or loss) that a lessor recognizes on a leveraged lease shall be composed of the following three elements:\n(a) Pretax lease income (or loss)\n(b) Investment tax credit\n(c) Tax effect of pretax lease income …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dcf82d47d01c5a1ef20ec127b45fb7691dea4196430009503423ac8cb1067b14","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-4","para":"35-4","html":"
The pretax lease income (or loss) and investment tax credit elements shall be allocated in proportionate amounts from the unearned and deferred income included in the lessor's net investment (as described in paragraph 842-50-30-1(d)). The tax effect of the pretax lease income (or loss) recognized shall be reflected in tax expense for the year. The tax effect of the difference between pretax accounting income (or loss) and taxable income (or loss) for the year shall be charged or credited to deferred taxes.
","snippet":"The pretax lease income (or loss) and investment tax credit elements shall be allocated in proportionate amounts from the unearned and deferred income included in the lessor's net investment (as described in paragraph 84…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4231bf055e87ab9b0907c1fe2f1eb95dff62338127338a1182ca5b37f7d7b26","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-5","para":"35-5","html":"
If, at any time during the lease term the application of the method prescribed in this Subtopic would result in a loss being allocated to future years, that loss shall be recognized immediately. This situation might arise in circumstances in which one of the important assumptions affecting net income is revised (see paragraphs
842-50-35-6 through 35-15
).
","snippet":"If, at any time during the lease term the application of the method prescribed in this Subtopic would result in a loss being allocated to future years, that loss shall be recognized immediately. This situation might aris…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47af9f6c829c9fe75d42b32c386327d2a84e8fdd583ea021194e05ad8766479d","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-6","para":"35-6","html":"
Any estimated residual value and all other important assumptions affecting estimated total net income from the leveraged lease shall be reviewed at least annually. The rate of return and the allocation of income to positive investment years shall be recalculated from lease inception following the method described in paragraphs
842-50-35-2 through 35-4
and using the revised assumption if, during the lease term, any of the following conditions occur:
  1. a
    The estimate of the residual value is determined to be excessive, and the decline in the residual value is judged to be other than temporary.
  2. b
    The revision of another important assumption changes the estimated total net income from the lease.
  3. c
    The projected timing of the income tax cash flows is revised.
","snippet":"Any estimated residual value and all other important assumptions affecting estimated total net income from the leveraged lease shall be reviewed at least annually. The rate of return and the allocation of income to posit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ba8040cd9a97c0169764a40b347266b8cb2c07ff87af369cf514d925f5913251","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-7","para":"35-7","html":"
The lessor shall update all assumptions used to calculate total and periodic income if the lessor is performing a recalculation of the leveraged lease. That recalculation shall include actual cash flows up to the date of the recalculation and projected cash flows following the date of recalculation.
","snippet":"The lessor shall update all assumptions used to calculate total and periodic income if the lessor is performing a recalculation of the leveraged lease. That recalculation shall include actual cash flows up to the date of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:66bd238aff17deda27ecb78b26d97a140bc720850afda966b239c574bc53ea0b","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-8","para":"35-8","html":"
The accounts constituting the net investment balance shall be adjusted to conform to the recalculated balances, and the change in the net investment shall be recognized as a gain or loss in the year in which the assumption is changed. The gain or loss shall be recognized as follows:
  1. a
    The pretax gain or loss shall be included in income from continuing operations before income taxes in the same line item in which leveraged lease income is recognized.
  2. b
    The tax effect of the gain or loss shall be included in the income tax line item.
  3. c
    An upward adjustment of the estimated residual value (including any guaranteed portion) shall not be made.
","snippet":"The accounts constituting the net investment balance shall be adjusted to conform to the recalculated balances, and the change in the net investment shall be recognized as a gain or loss in the year in which the assumpti…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:187aac2fbc40adb13348e4143f8f03a7fc696c3ff31a8d21719606650e371ddf","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-9","para":"35-9","html":"
The projected timing of income tax cash flows generated by the leveraged lease is an important assumption and shall be reviewed annually, or more frequently, if events or changes in circumstances indicate that a change in timing has occurred or is projected to occur. The income effect of a change in the income tax rate shall be recognized in the first accounting period ending on or after the date on which the legislation effecting a rate change becomes law.
","snippet":"The projected timing of income tax cash flows generated by the leveraged lease is an important assumption and shall be reviewed annually, or more frequently, if events or changes in circumstances indicate that a change i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d30da50256c3d2831386b59fc084d91cc1f530ee9a9bdf55025949b3664769d4","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-10","para":"35-10","html":"
A revision of the projected timing of the income tax cash flows applies only to changes or projected changes in the timing of income taxes that are directly related to the leveraged lease transaction. For example, a change in timing or projected timing of the tax benefits generated by a leveraged lease as a result of any of the following circumstances would require a recalculation because that change in timing is directly related to that lease:
  1. a
    An interpretation of the tax law
  2. b
    A change in the lessor's assessment of the likelihood of prevailing in a challenge by the taxing authority
  3. c
    A change in the lessor's expectations about settlement with the taxing authority.
","snippet":"A revision of the projected timing of the income tax cash flows applies only to changes or projected changes in the timing of income taxes that are directly related to the leveraged lease transaction. For example, a chan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5563fbd983896ddf998071e522fd13a56a9b04fc55c45452046d2bf0872048cb","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-11","para":"35-11","html":"
In contrast, as discussed in paragraph 842-50-35-20, a change in timing of income taxes solely as a result of an alternative minimum tax credit or insufficient taxable income of the lessor would not require a recalculation of a leveraged lease because that change in timing is not directly related to that lease. A recalculation would not be required unless there is an indication that the previous assumptions about total after-tax net income from the leveraged lease were no longer valid.
","snippet":"In contrast, as discussed in paragraph 842-50-35-20, a change in timing of income taxes solely as a result of an alternative minimum tax credit or insufficient taxable income of the lessor would not require a recalculati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b35a5a69fbee17fdd6c430a0b038ef5275023990b934bcf8c45b9223a3a73f82","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-12","para":"35-12","html":"
Tax positions shall be reflected in the lessor's initial calculation or subsequent recalculation on the recognition, measurement, and derecognition criteria in paragraphs 740-10-25-6, 740-10-30-7, and 740-10-40-2. The determination of when a tax position no longer meets those criteria is a matter of individual facts and circumstances evaluated in light of all available evidence.
","snippet":"Tax positions shall be reflected in the lessor's initial calculation or subsequent recalculation on the recognition, measurement, and derecognition criteria in paragraphs 740-10-25-6, 740-10-30-7, and 740-10-40-2. The de…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e8fb9b7c20e144df4a9269ba99cad7293c0d8dff7e0d9b8a05598acf81e88c99","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-13","para":"35-13","html":"
If the lessor expects to enter into a settlement of a tax position relating to a leveraged lease with a taxing authority, the cash flows following the date of recalculation shall include projected cash flows between the date of the recalculation and the date of any projected settlement and a projected settlement amount at the date of the projected settlement.
","snippet":"If the lessor expects to enter into a settlement of a tax position relating to a leveraged lease with a taxing authority, the cash flows following the date of recalculation shall include projected cash flows between the …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f31f79dd995d908baad0bd660afa7c4a5ca720ee66cc7c8d04e48e3369828257","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-14","para":"35-14","html":"
The recalculation of income from the leveraged lease shall not include interest or penalties in the cash flows from the leveraged lease.
","snippet":"The recalculation of income from the leveraged lease shall not include interest or penalties in the cash flows from the leveraged lease.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9bbdf1a7eccf3db7e794f227226b757ac781ab9295746e7dc4b16213c7197c5","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-15","para":"35-15","html":"
Advance payments and deposits made with a taxing authority shall not be considered an actual cash flow of the leveraged lease; rather, those payments and deposits shall be included in the projected settlement amount.
","snippet":"Advance payments and deposits made with a taxing authority shall not be considered an actual cash flow of the leveraged lease; rather, those payments and deposits shall be included in the projected settlement amount.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0bcb6664b5256cff97d46d5f441f111ace01adc618f22b568ac7a2f7aed50778","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1208edfbda936080676ca1814ecd2cdacff50cba31f48d3737120539184bf4c4","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Effect of Alternative Minimum Tax","paragraphs":[{"citation":"842-50-35-16","para":"35-16","html":"
An entity shall include assumptions about the effect of the alternative minimum tax, considering its consolidated tax position, in leveraged lease computations.
","snippet":"An entity shall include assumptions about the effect of the alternative minimum tax, considering its consolidated tax position, in leveraged lease computations.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f5119705dbc47b89eefe300fc395d9f52868f6893b5b7090d048d6ba1f467df8","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-17","para":"35-17","html":"
Any difference between alternative minimum tax depreciation and the tax depreciation assumed in the leveraged lease or between income recognition for financial reporting purposes and alternative minimum tax income could, depending on the lessor's overall tax situation, result in alternative minimum tax or the utilization of alternative minimum tax credits.
","snippet":"Any difference between alternative minimum tax depreciation and the tax depreciation assumed in the leveraged lease or between income recognition for financial reporting purposes and alternative minimum tax income could,…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6cde3d7f9ef1f3c654771a5bbfdd8669c3b9e5f4b13fbb85c6a99db922aa0a09","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-18","para":"35-18","html":"
If alternative minimum tax is paid or an alternative minimum tax credit is utilized, the total cash flows from the leveraged lease could be changed and the lessor's net investment in the leveraged lease and income recognition would be affected.
","snippet":"If alternative minimum tax is paid or an alternative minimum tax credit is utilized, the total cash flows from the leveraged lease could be changed and the lessor's net investment in the leveraged lease and income recogn…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:29e8dc4759117236fc291e1509bec4811713edd7857173793a3bdc8739a943a3","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-19","para":"35-19","html":"
If a change to the tax assumptions changes total estimated after-tax net income, the rate of return on the leveraged lease shall be recalculated from inception, the accounts constituting the lessor's net investment shall be adjusted, and a gain or loss shall be recognized in the year in which the assumption is changed.
","snippet":"If a change to the tax assumptions changes total estimated after-tax net income, the rate of return on the leveraged lease shall be recalculated from inception, the accounts constituting the lessor's net investment shall…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:189d9f9dc376baa9e97c11097d1b50cf6a65e008540370d39ba06196e5285b03","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"citation":"842-50-35-20","para":"35-20","html":"
However, an entity whose tax position frequently varies between alternative minimum tax and regular tax shall not be required to recalculate the rate of return on the leveraged lease each year unless there is an indication that the original assumptions regarding total after-tax net income from the lease are no longer valid. In that circumstance, the entity shall be required to revise the leveraged lease computations in any period in which total net income from the leveraged lease changes because of the effect of the alternative minimum tax on cash flows for the lease.
","snippet":"However, an entity whose tax position frequently varies between alternative minimum tax and regular tax shall not be required to recalculate the rate of return on the leveraged lease each year unless there is an indicati…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2bf9b02f8ee293db01e32685257e6a0db81e57f847709142bd458817445dce66","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8893d8c62c47502bcee26cc2d7d22b1c0b05b2d278543246777aa93790ac51db","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"block":null,"heading":"Transfer of Minimum Rental Payments","paragraphs":[{"citation":"842-50-35-21","para":"35-21","html":"
If a lessor sells substantially all of the minimum rental payments associated with a leveraged lease and retains an interest in the residual value of the leased asset, the lessor shall not recognize increases in the value of the lease residual to its estimated value over the remaining lease term. The lessor shall report any remaining interest thereafter at its carrying amount at the date of the sale of the lease payments. If it is determined subsequently that the fair value of the residual value of the leased asset has declined below the carrying amount of the interest retained and that decline is other than temporary, the asset shall be written down to fair value, and the amount of the write-down shall be recognized as a loss. That fair value becomes the asset's new carrying amount, and the asset shall not be increased for any subsequent increase in its fair value before its sale or disposition.
","snippet":"If a lessor sells substantially all of the minimum rental payments associated with a leveraged lease and retains an interest in the residual value of the leased asset, the lessor shall not recognize increases in the valu…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:77ad3e8d44694652ee2380ca9a4db0f1e987b43e5b197e5cf2bb26afec2cbc2a","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8b2397e9d356726cfb549ebb7d686343c5fc37d788395138a4af13f2ca3d5471","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6bdb3ce916d358df732f0fc1636f15b97bb842b848aeeef8f8974a95bf5ae285","downloaded_from":"2026-09-10T01:58:19.548Z","last_downloaded_at":"2026-09-10T01:58:19.548Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479116","source_sha256":"71b851cee8d5dbc356b775ab3c0e411f3cca4491bbf441fa0e09516e2743293a"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-45-1","para":"45-1","html":"
For purposes of presenting the investment in a leveraged lease in the lessor's balance sheet, the amount of related deferred taxes shall be presented separately (from the remainder of the net investment). In the income statement or the notes to that statement, separate presentation (from each other) shall be made of pretax income from the leveraged lease, the tax effect of pretax income, and the amount of investment tax credit recognized as income during the period.
","snippet":"For purposes of presenting the investment in a leveraged lease in the lessor's balance sheet, the amount of related deferred taxes shall be presented separately (from the remainder of the net investment). In the income s…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:281d1147c86693f6b4d6d09e0464060daff59a1e3364da1d57ce8faf2a475b90","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1a751d480898efc1418759348ec27d5aeee1f69c65807280ec2158b803c64ef0","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"block":null,"heading":"Income Taxes and Leveraged Leases","paragraphs":[{"citation":"842-50-45-2","para":"45-2","html":"
Integration of the results of income tax accounting for leveraged leases with the other results of accounting for income taxes under Topic 740 on income taxes is required if deferred tax credits related to leveraged leases are the only source (see paragraph 740-10-30-18) for recognition of a tax benefit for deductible temporary differences and carryforwards not related to leveraged leases. A valuation allowance is not necessary if deductible temporary differences and carryforwards will offset taxable amounts from future recovery of the net investment in the leveraged lease. However, to the extent that the amount of deferred tax credits for a leveraged lease as determined in accordance with this Subtopic differs from the amount of the deferred tax liability related to the leveraged lease that would otherwise result from applying the guidance in Topic 740, that difference is preserved and is not a source of taxable income for recognition of the tax benefit of deductible temporary differences and operating loss or tax credit carryforwards.
","snippet":"Integration of the results of income tax accounting for leveraged leases with the other results of accounting for income taxes under Topic 740 on income taxes is required if deferred tax credits related to leveraged leas…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:92212558f79a13155228bc5de66362cfd45deff9f0a2118c51deaa29a268acd2","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"citation":"842-50-45-3","para":"45-3","html":"
This Subtopic requires that the tax effect of any difference between the assigned value and the tax basis of a leveraged lease at the date of a business combination, an acquisition by a not-for-profit entity, or a joint venture formation shall not be accounted for as a deferred tax credit. Any tax effects included in unearned and deferred income as required by this Subtopic shall not be offset by the deferred tax consequences of other temporary differences or by the tax benefit of operating loss or tax credit carryforwards. However, deferred tax credits that arise after the date of a combination shall be accounted for in the same manner as for leveraged leases that were not acquired in a combination.
","snippet":"This Subtopic requires that the tax effect of any difference between the assigned value and the tax basis of a leveraged lease at the date of a business combination, an acquisition by a not-for-profit entity, or a joint …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:51933b46e702aab9bcf17c14aa394c80f0f3c14cdb034e668ae8d24290db3713","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a5d812d997287250118e916f29499112d5117904f66724d3badfa4f785041153","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ae6b4ec48a9de3d195afa1ffa0630be90b957abb20ea3c720e713ca1a3ed000","downloaded_from":"2026-09-10T01:58:21.856Z","last_downloaded_at":"2026-09-10T01:58:21.856Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478989","source_sha256":"a46b7cca2a8ac67cc74c32b13be1a2d864d3de1464250a2d0040b033b44eadda"}},{"number":"50","label":"50 Disclosure","anchor":"50-disclosure","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-50-1","para":"50-1","html":"
If leveraged leasing is a significant part of the lessor's business activities in terms of revenue, net income, or assets, the components of the net investment balance in leveraged leases as set forth in paragraph 842-50-25-1 shall be disclosed in the notes to financial statements.
","snippet":"If leveraged leasing is a significant part of the lessor's business activities in terms of revenue, net income, or assets, the components of the net investment balance in leveraged leases as set forth in paragraph 842-50…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8227e7f5c385422b7091ada11a81fcf71d079b2ab0ac56abe786f02f44291685","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"citation":"842-50-50-2","para":"50-2","html":"
For guidance on disclosures about financing receivables, which include receivables relating to a lessor's rights to payments from leveraged leases, see the guidance in Subtopic 326-20 on financial instruments measured at amortized cost.
","snippet":"For guidance on disclosures about financing receivables, which include receivables relating to a lessor's rights to payments from leveraged leases, see the guidance in Subtopic 326-20 on financial instruments measured at…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:180200cdaac56e7c31e851bc7efd8d459fefd95e8df2f9f4b245e657dfc3caae","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"citation":"842-50-50-3","para":"50-3","html":"
If accounting for the effect on leveraged leases of the change in tax rates results in a significant variation from the customary relationship between income tax expense and pretax accounting income and the reason for that variation is not otherwise apparent, the lessor shall disclose the reason for that variation.
","snippet":"If accounting for the effect on leveraged leases of the change in tax rates results in a significant variation from the customary relationship between income tax expense and pretax accounting income and the reason for th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e8a694e0d7cc37a3ffa2f054343a9507a037a089fcc9da9952939fc345ebf397","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f9fbc99b0c5a91465bea7e4a9c23fd7a9387b3e40f2d89820c9b5ea5ee6b5dc5","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:232fad3c6f3380da1bc123facade90979f075d97cf60bd410282e747f54ad5be","downloaded_from":"2026-09-10T01:58:25.544Z","last_downloaded_at":"2026-09-10T01:58:25.544Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479711","source_sha256":"f4b2a1b08f172b33977c946451a1df7ada58d2167fd1f2cf5cdbfa7b169528b2"}},{"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":"842-50-55-1","para":"55-1","html":"
Although the carrying amount of an asset acquired previously may not differ significantly from its fair value, it is unlikely that the two will be the same. However, regulated utilities have argued that the carrying amounts of certain of their assets always equal the fair value based on the utility's ability to recover that cost in conjunction with a franchise to sell a related service in a specified area. That argument is not valid when considering the value of the asset to a third-party purchaser that does not own that franchise.
","snippet":"Although the carrying amount of an asset acquired previously may not differ significantly from its fair value, it is unlikely that the two will be the same. However, regulated utilities have argued that the carrying amou…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59aa6e5cca111ddc8d46a5239ed50f95146dfd26de6aa3c2555f513cf0b60875","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-2","para":"55-2","html":"
A delayed equity investment frequently obligates the lessor to make up the shortfall between rent and debt service in the first several years of the transaction. The type of recourse debt resulting from the delayed equity investment does not contradict the notion of nonrecourse and, therefore, does not preclude leveraged lease accounting as long as other requirements of leveraged lease accounting are met. The lessor's related obligation should be recorded as a liability at present value at lease inception.
","snippet":"A delayed equity investment frequently obligates the lessor to make up the shortfall between rent and debt service in the first several years of the transaction. The type of recourse debt resulting from the delayed equit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9134e1700979b4677552055dff475f0167ee835794d293d54b98068f2761ccef","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-3","para":"55-3","html":"
Recognition of the liability would increase the lessor's net investment on which the lessor bases its pattern of income recognition. While the increase to the net investment results in an increase in income, it may be offset by the accrual of interest on the liability.
","snippet":"Recognition of the liability would increase the lessor's net investment on which the lessor bases its pattern of income recognition. While the increase to the net investment results in an increase in income, it may be of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:59913937a77babef7c6e87d5984a148ac51d6b42c088476a9c1a60ece84cc103","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-4","para":"55-4","html":"
The accounting for income taxes related to leveraged leases set forth in this Subtopic is not consistent with the guidance in Topic 740 on income taxes.
","snippet":"The accounting for income taxes related to leveraged leases set forth in this Subtopic is not consistent with the guidance in Topic 740 on income taxes.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d02c0b11d2bddbed71503f65089fc2fd23187ee0a19ed5c8a13cec181cfc2726","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-5","para":"55-5","html":"
The integration of the results of accounting for income taxes related to leveraged leases with the other results of accounting for income taxes as required by Topic 740 is an issue if all of the following exist:
  1. a
    The accounting for a leveraged lease requires recognition of deferred tax credits.
  2. b
    The guidance in Topic 740 limits the recognition of a tax benefit for deductible temporary differences and carryforwards not related to the leveraged lease.
  3. c
    Unrecognized tax benefits in this paragraph could offset taxable amounts that result from future recovery of the net investment in the leveraged lease.
","snippet":"The integration of the results of accounting for income taxes related to leveraged leases with the other results of accounting for income taxes as required by Topic 740 is an issue if all of the following exist:\n(a) The …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c44d879f2a4cba009ef13a3b79fe28fee7c841f07d36dc234f0de2d44ea08a62","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:95838276d1e94bbfbfac5b2eed0b007837ec1bfc501e13271b32046bb1366bba","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"block":null,"heading":"Illustrations","paragraphs":[{"citation":"842-50-55-6","para":"55-6","html":"
This Example illustrates a lessor's accounting for a leveraged lease in accordance with the guidance in this Subtopic. It also illustrates one way of meeting the disclosure requirements in paragraphs 842-50-45-1 and 842-50-50-1 as applied to a leveraged lease. The Example does not encompass all circumstances that may arise about leveraged leases; rather, the Example is based on a single instance of a leveraged lease. The elements of accounting and reporting illustrated for this Example of a leveraged lease are as follows:
  1. a
    Cash flow analysis by years (see paragraph 842-50-55-8)
  2. b
    Allocation of annual cash flow to investment and income (see paragraph 842-50-55-9)
  3. c
    Journal entries for lessor's initial investment and first year of operation (see paragraph 842-50-55-10)
  4. d
    Financial statements including notes at end of second year (see paragraph 842-50-55-11)
  5. e
    Accounting for a revision in the estimated residual value of the leased asset assumed to occur in the eleventh year of the lease (from $200,000 to $120,000):
    1. 1
      Revised allocation of annual cash flow to investment and income (see paragraph 842-50-55-12)
    2. 2
      Balances in investment accounts at beginning of the eleventh year before revised estimate (see paragraph 842-50-55-13)
    3. 3
      Journal entries (see paragraph 842-50-55-14)
    4. 4
      Adjustment of investment accounts (see paragraph 842-50-55-15).
","snippet":"This Example illustrates a lessor's accounting for a leveraged lease in accordance with the guidance in this Subtopic. It also illustrates one way of meeting the disclosure requirements in paragraphs 842-50-45-1 and 842-…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:aa7db35662eabffe73f48bce9adff36b4f4ca359d5f3a559c17175d57dcda525","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-7","para":"55-7","html":"
This Example has the following terms and assumptions.
","snippet":"This Example has the following terms and assumptions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4f5304978767bb65ed46562d63166cf64c3d75956f8ff88175db43543a3900c6","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-8","para":"55-8","html":"
Cash flow analysis by years follows.
","snippet":"Cash flow analysis by years follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe82d2b46caecc9e0f902afb728c86d2c1c2a58fdb8f6b1e32c03d40e2a3bc5a","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-9","para":"55-9","html":"
Allocation of annual cash flow to investment and income follows.
","snippet":"Allocation of annual cash flow to investment and income follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:497fce6f68e91853b2991863a3eb05255d64e437ac61c71a3d7df6003033b14d","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-10","para":"55-10","html":"
Illustrative journal entries for the year ending December 31, 1975, follow.
","snippet":"Illustrative journal entries for the year ending December 31, 1975, follow.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:90c5175dbcb951d7f639d6ecc7e934775f6afd18b02e9e179d20d2a0cdb6dbc0","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-11","para":"55-11","html":"
The following are illustrative partial financial statements including notes. The following are notes to the illustrative financial statements included in this Example.
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Allocation of annual cash flow to investment and income follows, revised to include new residual value estimate.
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Balances in investment accounts before revised estimate of residual value follow.
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Illustrative journal entries involving a reduction in residual value follow.
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Adjustment of investment accounts for revised estimates of residual value follows.
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This Example illustrates integration of the results of a lessor's income tax accounting for leveraged leases (in accordance with the guidance in this Subtopic) with the other results of accounting for income taxes as required by Topic 740.
","snippet":"This Example illustrates integration of the results of a lessor's income tax accounting for leveraged leases (in accordance with the guidance in this Subtopic) with the other results of accounting for income taxes as req…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06d1022cec80ca9543eea54412291adfaefe343c05ac41da15f885bd899c84df","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-17","para":"55-17","html":"
At the end of Year 1 (the current year), an entity has two temporary differences.
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The first temporary difference is for a leveraged lease that was entered into in a prior year. During Year 1, the enacted tax rate for Year 2 and thereafter changes from 40 percent to 35 percent.
","snippet":"The first temporary difference is for a leveraged lease that was entered into in a prior year. During Year 1, the enacted tax rate for Year 2 and thereafter changes from 40 percent to 35 percent.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c7f66a76c9eadd123ea18158149780dead07e89e41afe3f01509eda3094adc4d","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-19","para":"55-19","html":"
After adjusting for the change in estimated total net income from the lease as a result of the change in tax rates, the components of the investment in the leveraged lease at the end of Year 1 are as follows.
","snippet":"After adjusting for the change in estimated total net income from the lease as a result of the change in tax rates, the components of the investment in the leveraged lease at the end of Year 1 are as follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:63d7436889a8ed42832f9a7383e02282d33f9b929fb5df9c7a081607757297c2","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-20","para":"55-20","html":"
The second temporary difference is a $120,000 estimated liability for warranty expense that will result in a tax deduction in Year 5 when the liability is expected to be paid. Absent consideration of the deferred tax credits attributable to the leveraged lease, the weight of available evidence indicates that a valuation allowance is needed for the entire amount of the deferred tax asset related to that $120,000 deductible temporary difference.
","snippet":"The second temporary difference is a $120,000 estimated liability for warranty expense that will result in a tax deduction in Year 5 when the liability is expected to be paid. Absent consideration of the deferred tax cre…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:4ad1650734347f588f7ceb094edf5ce0a4b94699a42340f77a173065561e2093","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-21","para":"55-21","html":"
The tax basis of the investment in the leveraged lease at the end of Year 1 is $41,000. The amount of the deferred tax liability for that leveraged lease that would otherwise result from the application of guidance in Topic 740 on income taxes is determined as follows.
","snippet":"The tax basis of the investment in the leveraged lease at the end of Year 1 is $41,000. The amount of the deferred tax liability for that leveraged lease that would otherwise result from the application of guidance in To…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:35e5b2c06a8e8f349ab85178c535bfbc841fc3542a64498dff6a06eb5a00effb","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-22","para":"55-22","html":"
Loss carryback (to Year 2) and loss carryforward (to Year 20) of the $120,000 tax deduction for warranty expense in Year 5 would offset the $100,000 of taxable amounts resulting from future recovery of the net investment in the leveraged lease over the remainder of the lease term.
","snippet":"Loss carryback (to Year 2) and loss carryforward (to Year 20) of the $120,000 tax deduction for warranty expense in Year 5 would offset the $100,000 of taxable amounts resulting from future recovery of the net investment…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71f88e31b752207adcdcdb7448817a35033b57805ed212c9fc50d347dd3b3fbb","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-23","para":"55-23","html":"
At the end of Year 1, the entity recognizes a $42,000 ($120,000 at 35 percent) deferred tax asset and a related $7,000 valuation allowance. The effect is to recognize a $35,000 net deferred tax benefit for the reduction in deferred tax credits attributable to the leveraged lease. Deferred tax credits attributable to the leveraged lease determined under the guidance in this Subtopic are $39,000. However, the deferred tax liability determined is only $35,000. The $4,000 difference is not available for offsetting.
","snippet":"At the end of Year 1, the entity recognizes a $42,000 ($120,000 at 35 percent) deferred tax asset and a related $7,000 valuation allowance. The effect is to recognize a $35,000 net deferred tax benefit for the reduction …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e25a4ebee3270d6c769bc0b214856354573749f3761c0c160c52439f342b061e","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-24","para":"55-24","html":"
This Example illustrates how (in accordance with the guidance in paragraph 842-50-35-13 and other paragraphs) a lessor would include advance payments and deposits in a recalculation of a leveraged lease resulting from a determination by the lessor that it would enter into a settlement of a tax position arising from a leveraged lease.
","snippet":"This Example illustrates how (in accordance with the guidance in paragraph 842-50-35-13 and other paragraphs) a lessor would include advance payments and deposits in a recalculation of a leveraged lease resulting from a …","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:54e027c8d83cee53abe944ea9694ab5436b2eef3fd1308f1a2750fa31b92e4f7","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-25","para":"55-25","html":"
This Example assumes that the lessor has concluded that the position originally taken on the tax return would meet the more-likely-than-not threshold in Subtopic 740-10 on income taxes. It also assumes that the lessor would conclude that the estimate of $50 for the projected lease-in, lease-out settlement is consistent with the measurement guidance in that Subtopic.
","snippet":"This Example assumes that the lessor has concluded that the position originally taken on the tax return would meet the more-likely-than-not threshold in Subtopic 740-10 on income taxes. It also assumes that the lessor wo…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f4cb495ed45f83f36e8d6f7c522e19e6e880cd93c4acb7005ed8729de1762554","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-26","para":"55-26","html":"
A lessor makes an advance payment of $25 on July 1, 2007, $10 of which is estimated to be associated with issues arising from a lease-in, lease-out transaction. On July 1, 2007, the lessor changes its assumption about the timing of the tax cash flows and projects a settlement with the Internal Revenue Service on September 1, 2009. The projected settlement would result in a payment to the taxing authority of $125 of which $50 is associated with the lease-in, lease-out transaction. On July 1, 2007, when the lessor recalculates the leveraged lease, the lessor would include a $50 cash flow on September 1, 2009, as a projected outflow in the leveraged lease recalculation.
","snippet":"A lessor makes an advance payment of $25 on July 1, 2007, $10 of which is estimated to be associated with issues arising from a lease-in, lease-out transaction. On July 1, 2007, the lessor changes its assumption about th…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1e92cee8b4e0ac7da8f9bc0c55fc93ac985ea8ce685f4a7959ec1402ab68fbc5","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-27","para":"55-27","html":"
This Example illustrates one way that a lessor's investment in a leveraged lease might be valued by the acquiring entity in a business combination or an acquisition by a not-for-profit entity and the subsequent accounting for the investment in accordance with the guidance in this Subtopic. The elements of accounting and reporting illustrated for this Example are as follows:
  1. a
    Acquiring entity's cash flow analysis by years (see paragraph 842-50-55-29)
  2. b
    Acquiring entity's valuation of investment in the leveraged lease (see paragraph 842-50-55-30)
  3. c
    Acquiring entity's allocation of annual cash flow to investment and income (see paragraph 842-50-55-31)
  4. d
    Journal entry for recording allocation of purchase price to net investment in the leveraged lease (see paragraph 842-50-55-32)
  5. e
    Journal entries for the year ending December 31, 1984 (Year 10 of the lease) (see paragraph 842-50-55-33).
","snippet":"This Example illustrates one way that a lessor's investment in a leveraged lease might be valued by the acquiring entity in a business combination or an acquisition by a not-for-profit entity and the subsequent accountin…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:c67b9f9a6a125a8aa5c48d7e0240375e9beb0e92b352de5e56738ff710d3e161","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-28","para":"55-28","html":"
This Example has the following terms and assumptions.
","snippet":"This Example has the following terms and assumptions.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3cfdce8b7d3b242c2a1416708183f973c36461276b09b6035cfc6f0801e8cb0f","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-29","para":"55-29","html":"
Acquiring entity's cash flow analysis by years follows.
","snippet":"Acquiring entity's cash flow analysis by years follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9b9ebaf4bb0c4372125c6cae2242531a08d2901b30051584c5de300e6f7a535a","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-30","para":"55-30","html":"
Acquiring entity's valuation of investment in the leveraged lease follows.
","snippet":"Acquiring entity's valuation of investment in the leveraged lease follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1c1812aa817a23520c9355b9a11b3a3556f812d7c1b36a51337eb63039d52043","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-31","para":"55-31","html":"
Acquiring entity's allocation of annual cash flow to investment and income follows (see footnote (a)).
","snippet":"Acquiring entity's allocation of annual cash flow to investment and income follows (see footnote (a)).","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f464e500039e00fa1af6c1678d91f38846f2fa87797dffe22f35a7c6534c124","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-32","para":"55-32","html":"
Illustrative journal entry for recording allocation of purchase price to net investment in the leveraged lease follows.
","snippet":"Illustrative journal entry for recording allocation of purchase price to net investment in the leveraged lease follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:980972c1fa10e989750410817da1dd3d300d2342f7f92b065e8016c235243d54","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"citation":"842-50-55-33","para":"55-33","html":"
Illustrative journal entries for year ending December 31, 19Y4, follows.
","snippet":"Illustrative journal entries for year ending December 31, 19Y4, follows.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:65d0eda713a52f242c13ea585edef3423f51495fb49e4de2f37461864f7a455b","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dbe9f3296ad26b5e3b49852f75bbb1cc6ce52e4990acb5f1ccfc61768c9a1961","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0ddd20b3dc68426adff66bf0277adacd268f237fc6461b1483bfdec8098fe1db","downloaded_from":"2026-09-10T01:58:27.334Z","last_downloaded_at":"2026-09-10T01:58:27.334Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479679","source_sha256":"6f80143c8810b647d78ac2c3bc852a858df7b3d7e2eaf33078cab74879afa830"}},{"number":"S00","label":"SEC 00 Status","anchor":"sec-00-status","is_sec":true,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-50-S00-1","para":"S00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
842-50-S35-1AddedAccounting Standards Update No. 2017-1309/29/2017
842-50-S99-1AddedAccounting Standards Update No. 2017-1309/29/2017
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\n842-50-S35-1 | Added | Accounting Standards Update No. 2017-13 | 09/29/2017 |\n842-50-S99…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a236ffb9a07df26b1fea09149fefbb24375e9b0edc996d2ac68fe6ad73c71ea2","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04eafd5d6904896ef0b69d32d1a6c729f4f5a1973b81912ebfe720fdbb62c057","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:305fac1c53f6557e259128613db46c23511be19fa8a476cc7a53fdc8ccd2dc86","downloaded_from":"2026-09-10T01:58:31.075Z","last_downloaded_at":"2026-09-10T01:58:31.075Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483637","source_sha256":"8d8beb84e803d1626e7c00b42e79b256f75802a3b8b4dcd3c876eea2abf68de4"}},{"number":"S35","label":"SEC 35 Subsequent Measurement","anchor":"sec-35-subsequent-measurement","is_sec":true,"groups":[{"block":null,"heading":"Effect of a Change in Tax Law or Rates on Leveraged Leases","paragraphs":[{"citation":"842-50-S35-1","para":"S35-1","html":"
See paragraph 842-50-S99-1, SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leverage Leases, for SEC Staff views on the effect of a change in tax law or rate on leveraged leases.
","snippet":"See paragraph 842-50-S99-1, SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leverage Leases, for SEC Staff views on the effect of a change in tax law or rate on leveraged leases.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e085841c01cec453e96cd150dac3032d84e73f810228f56089f8a659d2f85033","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:dd55cbcc92bab5d86d0e6b2d12d94ee27918e7866b73ae59625ecea04ac14b24","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2e61f01ef564f17ce29e496316457618461f7ac695ca0286407adf02cc086562","downloaded_from":"2026-09-10T01:58:34.114Z","last_downloaded_at":"2026-09-10T01:58:34.114Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483631","source_sha256":"5a255a7e03a475a21ceeba5a92f96fc50230e42e99a0a650da5dd08c174a66cf"}},{"number":"S99","label":"SEC 99 SEC Materials","anchor":"sec-99-sec-materials","is_sec":true,"groups":[{"block":null,"heading":"SEC Staff Guidance","paragraphs":[{"citation":"842-50-S99-1","para":"S99-1","html":"
The following is the text of SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leveraged Leases.
","snippet":"The following is the text of SEC Observer Comment: Effect of a Change in Tax Law or Rates on Leveraged Leases.\nSection 842-50-35 requires that all components of a leveraged lease be recalculated from inception of the lea…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b74ceca5e9fd4f2bc8a1057edf93f2271d6815bb0230418dca12c8da18abd445","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2957133badbd3b7087b35b4d32045c3161e97f6ad4b427dd1e363a37c50b470a","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d60fdb789b4ab9c804c9ecc0e0953590f2a0b23d49e6245035734a93c0d097e6","downloaded_from":"2026-09-10T01:58:37.823Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147483630","source_sha256":"86374a51c631701dbb5487b5f764cf80d31aa338b37eb085bfd71abb51414e3d"}}],"enrichment":{"summary":"ASC 842-50 preserves the legacy leveraged lease accounting model, but only for leases that existed at the ASC 842 transition date and meet the criteria in 842-10-65-1(z) — no new leveraged leases may be created. A lessor records a single net investment consisting of rentals receivable (net of nonrecourse debt service), investment-tax-credit receivable, estimated residual value, and unearned/deferred income (842-50-25-1; 842-50-30-1), and recognizes income only in years when the net investment (less related deferred taxes) is positive, using the rate of return that distributes total net income to those years (842-50-35-2). Important assumptions, including residual value and the projected timing of income tax cash flows, must be reviewed at least annually, with any change triggering recalculation from lease inception and immediate gain or loss recognition (842-50-35-6 through 35-8).","key_points":["The Subtopic applies only to leases meeting transition paragraph 842-10-65-1(z); exercise of a previously not-reasonably-assured extension option is treated as a lease modification under that paragraph (842-50-15-1).","The lessor's net investment in a leveraged lease is the net of rentals receivable (net of the portion applicable to principal and interest on the nonrecourse debt), the investment-tax-credit receivable, the estimated residual value, and unearned and deferred income (842-50-25-1; 842-50-30-1).","Periodic income is computed on the net investment less related deferred taxes, using a rate of return — distinct from the interest rate implicit in the lease — applied only in years in which the net investment is positive (842-50-35-2).","Net income comprises pretax lease income (or loss), investment tax credit, and the tax effect of pretax lease income (or loss); any loss that the method would allocate to future years must be recognized immediately (842-50-35-3 through 35-5).","Residual value and other important assumptions (including the projected timing of income tax cash flows) must be reviewed at least annually; a decline in residual value that is other than temporary, or a change in total estimated net income, requires recalculation from inception with a gain or loss recognized in the year of the change, and upward adjustments of estimated residual value are prohibited (842-50-35-6 through 35-9; 35-19).","Recalculations reflect tax positions under 740-10-25-6, 740-10-30-7, and 740-10-40-2, exclude interest and penalties, and treat advance payments/deposits with a taxing authority as part of the projected settlement amount rather than actual cash flows (842-50-35-12 through 35-15).","Presentation requires related deferred taxes to be shown separately from the net investment on the balance sheet, and pretax leveraged lease income, its tax effect, and investment tax credit recognized to be shown separately in the income statement or notes; components of the net investment are disclosed if leveraged leasing is a significant part of the lessor's business (842-50-45-1; 842-50-50-1)."],"categories":["Leases","Subsequent measurement","Income taxes","Presentation"],"audience_level":"advanced","student_note":"This is grandfathered legacy guidance: ASC 842 prohibits new leveraged leases, so 842-50 applies only to pre-transition arrangements that were not modified. The classic exam trap is the asymmetry in residual value — an other-than-temporary decline forces a recalculation from lease inception with immediate gain/loss, but upward revisions of estimated residual value are never permitted (842-50-35-8(c)).","related_topics":["842-10","842-30","740-10","805-60","326-20","805"],"key_concepts":["leveraged lease","net investment in leveraged lease","nonrecourse debt","unearned and deferred income","investment tax credit","residual value review and recalculation","rate of return on positive net investment years","deferred taxes on leveraged leases"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58145ef72d3ee7531faef86d571d8ee573abf12cd2ea6b2acbd9428178653c7f","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.7617,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:187568482e96fc4b3ad2dacdad5293309ba9785a13ef2e40e222e172cff2b040","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"323-740","title":"Income Taxes—Proportional Amortization Method","topic_title":"Investments—Equity Method and Joint Ventures","score":0.758,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af5252a250f5cbe2568a2f8508561a3b4c939256bee79efb34c60416d3ecd71d","downloaded_from":"2026-09-09T23:41:07.480Z","last_downloaded_at":"2026-09-09T23:41:51.330Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","score":0.7526,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:946402916d9199d5d59d5c0f7c61e45b7304bc4a99e86c6f12628c202a21d0b6","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"740-10","title":"Overall","topic_title":"Income Taxes","score":0.7407,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b5d624388a47229e76e5d5c493bc1950619daf94b3bcf2210de608aa0ba134bd","downloaded_from":"2026-09-10T01:16:12.781Z","last_downloaded_at":"2026-09-10T01:17:20.090Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not 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Compensation","score":0.7312,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:601a9f75e4aa5384bd87c57148f3849ea1783dc545d0379cf185c85c7ce2bca9","downloaded_from":"2026-09-10T01:06:22.798Z","last_downloaded_at":"2026-09-10T01:06:52.467Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:057b8206d74ec5dfc6e2d0c2d575439b0fbccc007d16db447a45f7d25c1bbc20","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5de4aa4c23a2c38bd59ce3c5f334de5e423c3728e4f8a26eceed6425640605d7","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:af08ac5b826a5a7829e90a66c4ce49088ef6fe930af06a51c157dea07ea4e02e","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-974","topic":"842","title":"Real Estate—Real Estate Investment Trusts","area":"Broad Transactions","paragraphs":4,"summary":"This narrow subtopic tells a real estate investment trust (REIT) how much it may capitalize when a related service corporation performs leasing services for it. The service corporation is never treated as an independent third party, no matter how the REIT accounts for its investment in it (equity method, consolidation, etc.). Capitalized amounts are capped at the initial direct costs the REIT could have capitalized under 842-10-30-9 through 30-10 had it incurred the leasing costs directly.","concepts":["real estate investment trust","service corporation","initial direct costs","leasing services","related party not independent third party","capitalization ceiling","lessor cost capitalization"],"categories":["Recognition","Initial measurement","Leases","Industry-specific"],"level":"intermediate","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-974-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
ContractAddedAccounting Standards Update No. 2016-0202/25/2016
Initial Direct CostsAddedAccounting Standards Update No. 2016-0202/25/2016
LeaseAddedAccounting Standards Update No. 2016-0202/25/2016
Real Estate Investment TrustAddedAccounting Standards Update No. 2016-0202/25/2016
Service CorporationAddedAccounting Standards Update No. 2016-0202/25/2016
974-842-05-1AddedAccounting Standards Update No. 2016-0202/25/2016
974-842-15-1AddedAccounting Standards Update No. 2016-0202/25/2016
974-842-25-1AddedAccounting Standards Update No. 2016-0202/25/2016
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nContract | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nInitial Direct…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:ceed2e6e9588a0f7c1e0317a482e68098437bf06a963c085c5286536be2f5ce1","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:41.636Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478276","source_sha256":"bd4629a18850ea80549eadf845363a5466fc2fb7ed92ac50e3c80c652f6c2911"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:170cef3bdd69d877b02fb3ebabede4f4ce9f0380d5e6cdf233d8552d0273df2e","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:41.636Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478276","source_sha256":"bd4629a18850ea80549eadf845363a5466fc2fb7ed92ac50e3c80c652f6c2911"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:06743285200cfa1b8af5f401e77550a0e72713954d29943ae02f21600300ef19","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:41.636Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478276","source_sha256":"bd4629a18850ea80549eadf845363a5466fc2fb7ed92ac50e3c80c652f6c2911"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-974-05-1","para":"05-1","html":"
This Subtopic addresses recognition issues for a real estate investment trust with an investment in a service corporation providing leasing services.
","snippet":"This Subtopic addresses recognition issues for a real estate investment trust with an investment in a service corporation providing leasing services.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:58e70c63b3c7fb462db4a6796867715a2bb0fb3642a0b602c1e3ff1bee14025d","downloaded_from":"2026-09-10T01:58:45.033Z","last_downloaded_at":"2026-09-10T01:58:45.033Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477707","source_sha256":"7650fa9c457080048be3e14b69bd56a479ae7876521735bc170234142a383141"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2567e77c15c7630faa841799cac96759a6ba146663c27fcf54ab568db78d7279","downloaded_from":"2026-09-10T01:58:45.033Z","last_downloaded_at":"2026-09-10T01:58:45.033Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477707","source_sha256":"7650fa9c457080048be3e14b69bd56a479ae7876521735bc170234142a383141"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b0cedaa6abdfd26394b8de91601cd18b83d5edc95db54b116d65f692baf27be5","downloaded_from":"2026-09-10T01:58:45.033Z","last_downloaded_at":"2026-09-10T01:58:45.033Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477707","source_sha256":"7650fa9c457080048be3e14b69bd56a479ae7876521735bc170234142a383141"}},{"number":"15","label":"15 Scope and Scope Exceptions","anchor":"15-scope-and-scope-exceptions","is_sec":false,"groups":[{"block":null,"heading":"Overall Guidance","paragraphs":[{"citation":"842-974-15-1","para":"15-1","html":"
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15.
","snippet":"This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 974-10-15.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:03667e2e0c9cf7eb00ca11997d3b90321fd2ddd2ccab2aabe7beb1ea78288acc","downloaded_from":"2026-09-10T01:58:48.876Z","last_downloaded_at":"2026-09-10T01:58:48.876Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478188","source_sha256":"efa54323b8f16c3c3cd8780329f11e4d4dcc1d3b965169aa243a773e035f4569"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:463c6d4d7eedeb3048f1dbe5143c8e241ad8a498960c7b3d52b990a96a5a7408","downloaded_from":"2026-09-10T01:58:48.876Z","last_downloaded_at":"2026-09-10T01:58:48.876Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478188","source_sha256":"efa54323b8f16c3c3cd8780329f11e4d4dcc1d3b965169aa243a773e035f4569"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b2b2cfac107657400e5c2a1186e92fe6bc941c0fb3e2afb0dbaa3dc86d998448","downloaded_from":"2026-09-10T01:58:48.876Z","last_downloaded_at":"2026-09-10T01:58:48.876Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478188","source_sha256":"efa54323b8f16c3c3cd8780329f11e4d4dcc1d3b965169aa243a773e035f4569"}},{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-974-25-1","para":"25-1","html":"
Regardless of the method of accounting used by a real estate investment trust for its investment in a service corporation, the service corporation shall not be considered an independent third party and the amount of costs capitalized by the real estate investment trust for leasing services provided by the service corporation shall be no greater than the amount of initial direct costs (see paragraphs
842-10-30-9 through 30-10
) that would have been capitalized had the real estate investment trust incurred the costs directly.
","snippet":"Regardless of the method of accounting used by a real estate investment trust for its investment in a service corporation, the service corporation shall not be considered an independent third party and the amount of cost…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5a197c35979ac5c214d324a6b9f27f6c2daf82f67fe5f8d2519c77a03f8dcfa5","downloaded_from":"2026-09-10T01:58:53.121Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477632","source_sha256":"5c5623c4af63c15cc572aeb87192f4208c94c0b4cee2b407daf0f952c3f1ff5c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:20f95dd5d24aaf97bf8be309189f9b27a521aad3622feea392d2bd06a049c445","downloaded_from":"2026-09-10T01:58:53.121Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477632","source_sha256":"5c5623c4af63c15cc572aeb87192f4208c94c0b4cee2b407daf0f952c3f1ff5c"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fdb7bb87c12b0192375e3a79960afa8bac2e41a69bb381890b9e052fd79dd9be","downloaded_from":"2026-09-10T01:58:53.121Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477632","source_sha256":"5c5623c4af63c15cc572aeb87192f4208c94c0b4cee2b407daf0f952c3f1ff5c"}}],"enrichment":{"summary":"This narrow subtopic tells a real estate investment trust (REIT) how much it may capitalize when a related service corporation performs leasing services for it. The service corporation is never treated as an independent third party, no matter how the REIT accounts for its investment in it (equity method, consolidation, etc.). Capitalized amounts are capped at the initial direct costs the REIT could have capitalized under 842-10-30-9 through 30-10 had it incurred the leasing costs directly.","key_points":["The Subtopic addresses recognition issues for a REIT that holds an investment in a service corporation providing leasing services (842-974-05-1).","Scope follows Section 974-10-15, the REIT Overall Subtopic scope (842-974-15-1).","Regardless of the REIT's method of accounting for its investment, the service corporation shall not be considered an independent third party (842-974-25-1).","Costs capitalized by the REIT for leasing services provided by the service corporation shall be no greater than the initial direct costs that would have been capitalized had the REIT incurred the costs directly (842-974-25-1, referencing 842-10-30-9 through 30-10).","Any excess of amounts charged by the service corporation over that initial direct cost ceiling therefore cannot be capitalized."],"categories":["Recognition","Initial measurement","Leases","Industry-specific"],"audience_level":"intermediate","student_note":"Tested as a related-party anti-abuse rule: a REIT cannot inflate capitalized leasing costs by routing them through an affiliated service corporation. The common misunderstanding is thinking the accounting method for the investment (or the fee actually paid) drives the answer—it does not; the cap is always the initial direct costs the REIT itself could have capitalized.","related_topics":["842-10","974-10","970-340","323-10","810-10"],"key_concepts":["real estate investment trust","service corporation","initial direct costs","leasing services","related party not independent third party","capitalization ceiling","lessor cost capitalization"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:952f8325e03f3ad9ad8d189f3e450af3d442655b997a0852dfcdb25347e256d3","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"323-974","title":"Real 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Trusts","topic_title":"Consolidation","score":0.8153,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:71712bb9dba12b0d5daf0729aa353087f0888aa0b8b7172c53c00ca8c117d34c","downloaded_from":"2026-09-10T01:33:51.197Z","last_downloaded_at":"2026-09-10T01:34:06.992Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"720-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Other Expenses","score":0.7581,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0fbf24bf5c7742ba0b2cc5972a0a1ad32d6f221a1e3c6f5afc6a3de833de7483","downloaded_from":"2026-09-10T01:13:54.098Z","last_downloaded_at":"2026-09-10T01:14:12.248Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"974-10","title":"Overall","topic_title":"Real Estate—Real Estate Investment Trusts","score":0.7296,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:47efe4a63f479e5242ae90898e2f7e0790416b74733ceb58a622ffeb89c772e5","downloaded_from":"2026-09-10T02:26:25.491Z","last_downloaded_at":"2026-09-10T02:26:47.600Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"840-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Leases","score":0.7264,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:219313bb46a5efe534b66ed70b676b76f2ef04d1d7698ff41af84ae5442d1362","downloaded_from":"2026-09-10T01:54:50.132Z","last_downloaded_at":"2026-09-10T01:55:00.701Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not 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Arrangements","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f38970d4835427ff54d1369708eb5bed085bbcb10e16255d2902107363dfefdd","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"842-980","title":"Regulated Operations","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a3f45e47f554cc769429b1f4b2f417f6885ba524ec54e8d6fb88dcc2125d0458","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by 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Lease classification for financial reporting follows Topic 842 regardless of how the regulator treats the lease, but the timing of expense (or income) recognition is modified to conform to the rate treatment, with timing differences capitalized or accrued as regulatory assets or liabilities. Sale-and-leaseback timing differences are handled either as part of a phase-in plan under Subtopic 980-340 or by conforming recognition to the Regulated Operations Topic.","concepts":["regulated operations","rate-making purposes","allowable cost","regulatory asset","phase-in plan","finance lease classification","sale and leaseback financing","right-of-use asset amortization"],"categories":["Leases","Industry-specific","Presentation","Subsequent measurement"],"level":"advanced","topic_title":"Leases","sections":[{"number":"00","label":"00 Status","anchor":"00-status","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-980-00-1","para":"00-1","html":"
The following table identifies the changes made to this Subtopic.
Paragraph Action Accounting Standards Update Date
Allowable Costs Added Accounting Standards Update No. 2016-02 02/25/2016
Phase-In Plan Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-05-1 Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-15-1 Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-25-1 through 25-3
 Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-35-1 Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-45-1 through 45-4
 Added Accounting Standards Update No. 2016-02 02/25/2016
980-842-55-1 Added Accounting Standards Update No. 2016-02 02/25/2016
","snippet":"The following table identifies the changes made to this Subtopic.\nParagraph | Action | Accounting Standards Update | Date |\n| | | |\nAllowable Costs | Added | Accounting Standards Update No. 2016-02 | 02/25/2016 |\nPhase-I…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:19fd2eddd17490dad0cf900984b426769a097a431ac9c4b54374649898392498","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:58:56.654Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478003","source_sha256":"d80b737fa6ea36f7e98f57585119ad9b17736711760582e25abdfabfc626516f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:e9e0f486720b4ffc33ad7e761030ab65d692fdb4f1bfb470599618c99cd29f0a","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:58:56.654Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478003","source_sha256":"d80b737fa6ea36f7e98f57585119ad9b17736711760582e25abdfabfc626516f"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0f8f6b65e208d8fb41c31d8fb58e6035a6885ce11e2b7ecdf65e3513d1024256","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:58:56.654Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478003","source_sha256":"d80b737fa6ea36f7e98f57585119ad9b17736711760582e25abdfabfc626516f"}},{"number":"05","label":"05 Overview and Background","anchor":"05-overview-and-background","is_sec":false,"groups":[{"block":null,"heading":null,"paragraphs":[{"citation":"842-980-05-1","para":"05-1","html":"
This Subtopic provides guidance on accounting for leases for entities with regulated operations.
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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 980-10-15.
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Accounting for sale and leaseback transactions in accordance with the guidance in Subtopic 842-40 may result in a difference between the timing of income and expense recognition required by that Subtopic and the timing of income and expense recognition for rate-making purposes.
","snippet":"Accounting for sale and leaseback transactions in accordance with the guidance in Subtopic 842-40 may result in a difference between the timing of income and expense recognition required by that Subtopic and the timing o…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:d058f577992a3c5309608635fbfabec410d2cc2eec0a242eb12b82d3fd685756","downloaded_from":"2026-09-10T01:59:08.707Z","last_downloaded_at":"2026-09-10T01:59:08.707Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478136","source_sha256":"cc2e3dfb9040f986368fa8b890dfdcd131e9a2b78f252795c5e06259c595a9e1"}},{"citation":"842-980-25-2","para":"25-2","html":"
That difference shall be accounted for as follows:
  1. a
    If the difference in timing of income and expense recognition constitutes all or a part of a phase-in plan, it shall be accounted for in accordance with Subtopic 980-340.
  2. b
    Otherwise, the timing of income and expense recognition related to the sale and leaseback transaction shall be modified as necessary to conform to the Regulated Operations Topic. That modification required for a transaction that is accounted for as a financing is further described in the following paragraph and paragraphs
    980-840-35-1 through 35-2
    .
","snippet":"That difference shall be accounted for as follows:\n(a) If the difference in timing of income and expense recognition constitutes all or a part of a phase-in plan, it shall be accounted for in accordance with Subtopic 980…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5aa71e3350e1aac0ced68fc9b352aed130ea7da56467992e5d329aee24cdf3b3","downloaded_from":"2026-09-10T01:59:08.707Z","last_downloaded_at":"2026-09-10T01:59:08.707Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478136","source_sha256":"cc2e3dfb9040f986368fa8b890dfdcd131e9a2b78f252795c5e06259c595a9e1"}},{"citation":"842-980-25-3","para":"25-3","html":"
The difference between the amount of income or expense recognized for a transaction that is not part of a phase-in plan and that is accounted for as a financing under Subtopic 842-40 and the amount of income or expense included in allowable cost for rate-making purposes shall be capitalized or accrued as a separate regulatory-created asset or liability, as appropriate, if that difference meets the criteria of the Regulated Operations Topic.
","snippet":"The difference between the amount of income or expense recognized for a transaction that is not part of a phase-in plan and that is accounted for as a financing under Subtopic 842-40 and the amount of income or expense i…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:f1695a37b293d87ea9af64bf8b528cd003c4f346a6dd4c3a6cd141a7185d94cd","downloaded_from":"2026-09-10T01:59:08.707Z","last_downloaded_at":"2026-09-10T01:59:08.707Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478136","source_sha256":"cc2e3dfb9040f986368fa8b890dfdcd131e9a2b78f252795c5e06259c595a9e1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b9023aa2da62e641f5408a5bc5ac6e103a5ba75b7e133c3c4d9a5a7270ff4efc","downloaded_from":"2026-09-10T01:59:08.707Z","last_downloaded_at":"2026-09-10T01:59:08.707Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478136","source_sha256":"cc2e3dfb9040f986368fa8b890dfdcd131e9a2b78f252795c5e06259c595a9e1"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:bf25b07d5dc86eac8df6b4cec72b48b4985cddf5f2b7abdc83f9b5cb16dcfec6","downloaded_from":"2026-09-10T01:59:08.707Z","last_downloaded_at":"2026-09-10T01:59:08.707Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478136","source_sha256":"cc2e3dfb9040f986368fa8b890dfdcd131e9a2b78f252795c5e06259c595a9e1"}},{"number":"35","label":"35 Subsequent Measurement","anchor":"35-subsequent-measurement","is_sec":false,"groups":[{"block":null,"heading":"Sale and Leaseback Transactions","paragraphs":[{"citation":"842-980-35-1","para":"35-1","html":"
If the sale and leaseback transaction is accounted for as a financing and the sale is recognized for rate-making purposes, the total of interest imputed under the interest method for the financing and the depreciation of the underlying asset shall be modified to equal the total lease expense and the gain or loss allowable for rate-making purposes.
","snippet":"If the sale and leaseback transaction is accounted for as a financing and the sale is recognized for rate-making purposes, the total of interest imputed under the interest method for the financing and the depreciation of…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fe7dde76ad3fcf0260a779400cc19d3a8f0645674cb5e476045a7858f856e506","downloaded_from":"2026-09-10T01:59:11.732Z","last_downloaded_at":"2026-09-10T01:59:11.732Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479141","source_sha256":"9c4d8ab72e7b7c3ab10dda7c72e56f5fadad30374ef4022f4873c917cdf26bd9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3c2b1245ce575d2562897d3d461f197b2519f68197df42cfad2cba07ddfb49ad","downloaded_from":"2026-09-10T01:59:11.732Z","last_downloaded_at":"2026-09-10T01:59:11.732Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479141","source_sha256":"9c4d8ab72e7b7c3ab10dda7c72e56f5fadad30374ef4022f4873c917cdf26bd9"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:04996e556eeb86d5e346bc277fb10afb6bce826533fa73dda5a8acef4b480d03","downloaded_from":"2026-09-10T01:59:11.732Z","last_downloaded_at":"2026-09-10T01:59:11.732Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147479141","source_sha256":"9c4d8ab72e7b7c3ab10dda7c72e56f5fadad30374ef4022f4873c917cdf26bd9"}},{"number":"45","label":"45 Other Presentation Matters","anchor":"45-other-presentation-matters","is_sec":false,"groups":[{"block":null,"heading":"Treatment of Leases for Rate-Making Purposes","paragraphs":[{"citation":"842-980-45-1","para":"45-1","html":"
Topic 842 specifies criteria for classification of leases and the method of accounting for each type of lease. For rate-making purposes, a lease may be treated as an operating lease even though the lease would be classified as a finance lease under those criteria. In effect, the amount of the lease payment is included in allowable costs as rental expense in the period it covers.
","snippet":"Topic 842 specifies criteria for classification of leases and the method of accounting for each type of lease. For rate-making purposes, a lease may be treated as an operating lease even though the lease would be classif…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:6f21b43c0b43316636506a688bee0a5225781a535ea1fd8e117a376dbfba71f1","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}},{"citation":"842-980-45-2","para":"45-2","html":"
For financial reporting purposes, the classification of the lease is not affected by the regulator's actions. The regulator cannot eliminate an obligation that was not imposed by the regulator (see paragraph 980-405-40-1). Also, by including the lease payments as allowable costs, the regulator sets rates that will provide revenue approximately equal to the combined amount of the right-of-use asset and interest on the lease liability over the term of the lease and, thus, provides reasonable assurance of the existence of an asset (see paragraph 980-340-25-1). Accordingly, regulated entities shall classify leases in accordance with Topic 842.
","snippet":"For financial reporting purposes, the classification of the lease is not affected by the regulator's actions. The regulator cannot eliminate an obligation that was not imposed by the regulator (see paragraph 980-405-40-1…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:44e017aa28712332602480dabf6e90057c1a1fd07af81f8dac0c10e6277465f3","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}},{"citation":"842-980-45-3","para":"45-3","html":"
The nature of the expense elements related to a finance lease (amortization of the right-of-use asset and interest on the lease liability) is not changed by the regulator's action; however, the timing of expense recognition related to the lease would be modified to conform to the rate treatment. Thus, amortization of the right-of-use asset shall be modified so that the total of interest on the lease liability and amortization of the right-of-use asset shall equal the lease expense that was allowed for rate-making purposes. For newly completed plants such regulatory treatment could result in a phase-in plan as defined in Subtopic 980-340.
","snippet":"The nature of the expense elements related to a finance lease (amortization of the right-of-use asset and interest on the lease liability) is not changed by the regulator's action; however, the timing of expense recognit…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:529e519bf3fbb2c44bfcb68949ddba29481f59ad2a798c74ee8ac422713b0db5","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}},{"citation":"842-980-45-4","para":"45-4","html":"
Paragraph 842-20-45-4 states that an entity is not required to classify the interest expense and amortization of the right-of-use asset in a finance lease as separate items in an income statement. For example, the amounts of amortization of the right-of-use asset and interest on the related lease liability could each be combined with other costs and presented in a manner consistent with how the entity presents depreciation or amortization of similar assets and other interest expense. However, the disclosure of total interest cost incurred, required by Subtopic 835-20, shall include the interest on that lease liability, and the disclosure of the total amortization of the entity's right-of-use assets arising under a finance lease and interest on finance lease liabilities, required by Section 842-20-50, shall include amortization of that right-of-use asset and interest on that lease liability.
","snippet":"Paragraph 842-20-45-4 states that an entity is not required to classify the interest expense and amortization of the right-of-use asset in a finance lease as separate items in an income statement. For example, the amount…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2cb4eb835b228c76d1870e70fa5926e6bb3e6d7b129fbfb945cbf83507eea3fe","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:193ca15b55af9a179a07851b1699af9b80ecbde1ebd08dbbf83b94aada83f1e9","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b15db5c2779d6ba17751a25063deae27ac7f83084c7778d17ee31d6f08c8958d","downloaded_from":"2026-09-10T01:59:15.695Z","last_downloaded_at":"2026-09-10T01:59:15.695Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478351","source_sha256":"74a6de962ad2573b7a485f11ef069ee7cd06ca742ee8056420b208411d5b20e0"}},{"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":"842-980-55-1","para":"55-1","html":"
Paragraph 842-20-45-4 states that an entity is not required to classify the interest expense and amortization of the right-of-use asset in a finance lease as separate items in an income statement. However, that paragraph also states that the interest expense and the amortization of the right-of-use asset in a finance lease should be presented in a manner consistent with how the entity presents depreciation or amortization of similar assets and other interest expense. For example, the amounts of amortization of the right-of-use asset and interest on the related lease liability could each be combined with other costs and presented in a manner consistent with how the entity presents depreciation or amortization of similar assets and other interest expense. However, in that circumstance, the disclosure of total interest cost incurred, required by Subtopic 835-20, would include the interest on that lease liability, and the disclosure of the total amortization of the entity's right-of-use assets arising under a finance lease and interest on finance lease liabilities, required by Section 842-20-50, would include amortization of that right-of-use asset and interest on that lease liability.
","snippet":"Paragraph 842-20-45-4 states that an entity is not required to classify the interest expense and amortization of the right-of-use asset in a finance lease as separate items in an income statement. However, that paragraph…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b84e067b71dc84dbb7a1db8d0a447eee77b4d949c33590d562ca9cd31aec5764","downloaded_from":"2026-09-10T01:59:18.312Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478631","source_sha256":"2896da6670772bae09d2ed9fb2d0c0ffd7232123ff474ed4cbf7ed3930ca5f22"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:744e34740df29990bf9c1753e56a1f8473af5ac0f120e92fa4578a6969a051a8","downloaded_from":"2026-09-10T01:59:18.312Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478631","source_sha256":"2896da6670772bae09d2ed9fb2d0c0ffd7232123ff474ed4cbf7ed3930ca5f22"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b99dd83988d8562bb149004ed9124dd3b83321d948679ca4b1b2888ebbd746a7","downloaded_from":"2026-09-10T01:59:18.312Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147478631","source_sha256":"2896da6670772bae09d2ed9fb2d0c0ffd7232123ff474ed4cbf7ed3930ca5f22"}}],"enrichment":{"summary":"This Subtopic addresses how rate-regulated entities account for leases when the regulator's rate-making treatment differs from Topic 842. Lease classification for financial reporting follows Topic 842 regardless of how the regulator treats the lease, but the timing of expense (or income) recognition is modified to conform to the rate treatment, with timing differences capitalized or accrued as regulatory assets or liabilities. Sale-and-leaseback timing differences are handled either as part of a phase-in plan under Subtopic 980-340 or by conforming recognition to the Regulated Operations Topic.","key_points":["Regulated entities must classify leases in accordance with Topic 842; the regulator's treatment of a finance lease as an operating lease for rate-making does not change classification, because the regulator cannot eliminate an obligation it did not impose (842-980-45-1 through 45-2).","For a finance lease, the nature of the expense elements (amortization of the right-of-use asset and interest on the lease liability) is unchanged, but amortization of the ROU asset is modified so that total interest plus amortization equals the lease expense allowed for rate-making purposes (842-980-45-3).","Such regulatory treatment for newly completed plants could constitute a phase-in plan as defined in Subtopic 980-340 (842-980-45-3).","Sale and leaseback timing differences between Subtopic 842-40 and rate-making treatment are accounted for under Subtopic 980-340 if they are all or part of a phase-in plan; otherwise recognition timing is modified to conform to the Regulated Operations Topic (842-980-25-2).","A non-phase-in timing difference on a sale and leaseback accounted for as a financing is capitalized or accrued as a separate regulatory-created asset or liability if it meets the criteria of the Regulated Operations Topic (842-980-25-3).","If a sale and leaseback is accounted for as a financing but the sale is recognized for rate-making purposes, imputed interest under the interest method plus depreciation of the underlying asset is modified to equal total lease expense and the gain or loss allowable for rate-making purposes (842-980-35-1).","Interest expense and ROU asset amortization need not be separate income statement line items (842-20-45-4), but they must be included in the total interest cost disclosure under Subtopic 835-20 and the finance lease disclosures under Section 842-20-50 (842-980-45-4; 842-980-55-1)."],"categories":["Leases","Industry-specific","Presentation","Subsequent measurement"],"audience_level":"advanced","student_note":"The key takeaway is the split between classification and timing: rate regulation never changes whether a lease is a finance lease, but it does reshape the pattern of expense recognition, with the difference parked in a regulatory asset or liability. Students commonly err by assuming a regulator's operating-lease treatment lets a utility report the lease as an operating lease for GAAP.","related_topics":["980-340","980-840","842-40","842-20","835-20","980-405"],"key_concepts":["regulated operations","rate-making purposes","allowable cost","regulatory asset","phase-in plan","finance lease classification","sale and leaseback financing","right-of-use asset amortization"],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8fe4f76ef7ce3571fba9c7a0a8efed609b52ed690ac18e8f1b35f7600ee33bef","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"related":[{"number":"842-10","title":"Overall","topic_title":"Leases","score":0.762,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5d73138ea410f6df3bbefa726920dd9fd71898055aa7dcf82f7d53c37f23fcd7","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:56:24.118Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-50","title":"Leveraged Lease Arrangements","topic_title":"Leases","score":0.7526,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:2db688b2534124c8fd4c2bd2d1e4dd88e88266c223ad2a1c3f75fd1270406d61","downloaded_from":"2026-09-10T01:58:02.364Z","last_downloaded_at":"2026-09-10T01:58:37.823Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-20","title":"Lessee","topic_title":"Leases","score":0.7516,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:a8afa25e09d469942c96572ac201e23ae854572179e713dbaa71f4d6a760e336","downloaded_from":"2026-09-10T01:56:28.044Z","last_downloaded_at":"2026-09-10T01:57:02.089Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"470-980","title":"Regulated Operations","topic_title":"Debt","score":0.7258,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0fbdbbecaad0433e8a949314fceaf8ab624b3b327e8a3d73184fa9be5105394f","downloaded_from":"2026-09-10T00:35:14.586Z","last_downloaded_at":"2026-09-10T00:35:24.744Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"980-10","title":"Overall","topic_title":"Regulated Operations","score":0.7194,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:fd5824dd5d27b6ab9ad0eb897e06f4b008254a465a1852d2393f3730d6723a15","downloaded_from":"2026-09-10T02:27:16.483Z","last_downloaded_at":"2026-09-10T02:27:45.235Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},{"number":"842-40","title":"Sale and Leaseback Transactions","topic_title":"Leases","score":0.7055,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:013fb2050e2c648b390a66a54cb0e4776fac2f7ff5ca8033405e65bf03d22aa2","downloaded_from":"2026-09-10T01:57:35.813Z","last_downloaded_at":"2026-09-10T01:57:59.856Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"prev":{"number":"842-974","title":"Real Estate—Real Estate Investment Trusts","topic_title":"Leases","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:5de4aa4c23a2c38bd59ce3c5f334de5e423c3728e4f8a26eceed6425640605d7","downloaded_from":"2026-09-10T01:58:41.636Z","last_downloaded_at":"2026-09-10T01:58:53.121Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"next":{"number":"845-10","title":"Overall","topic_title":"Nonmonetary Transactions","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:8cdf857bd516c54e6a6771dabad9ea5927ce084de442da64f8a9772bd889905b","downloaded_from":"2026-09-10T01:59:22.320Z","last_downloaded_at":"2026-09-10T01:59:59.992Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:9ba69bd132dbf7818189037f4d2bbebd6c0d6621eec8de5aa8f647fe49cdd9d1","downloaded_from":"2026-09-10T01:58:56.654Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}],"paragraphs":710,"summary":"ASC 842 replaces the old capital/operating lease model with a right-of-use framework: a contract is or contains a lease if it conveys the right to control the use of an identified item of PP&E for a period of time in exchange for consideration (842-10-15-3, 15-4), and 842-10 supplies the common mechanics — identifying and separating lease and nonlease components, allocating consideration, classifying the lease at commencement under the five criteria in 842-10-25-2, and determining lease term and lease payments. Lessees then apply 842-20, recognizing an ROU asset and lease liability at the present value of unpaid lease payments (842-20-25-1; 30-1), with finance leases producing amortization plus interest and operating leases a single straight-line lease cost; lessors apply 842-30, either derecognizing the asset and recording a net investment in the lease (sales-type/direct financing) or keeping the asset and recognizing straight-line lease income (operating), subject to a collectibility-not-probable override. Specialized subtopics address sale and leaseback transactions and failed sales accounted for as financings (842-40), grandfathered leveraged leases (842-50), rate-regulated entities (842-980), and REIT service corporation leasing costs (842-974). The central idea is that classification drives the pattern of expense and income recognition, but essentially all leases are now on the lessee's balance sheet.","concepts":["right-of-use asset and lease liability","identified asset and right to control use","lease classification criteria","lease term and lease payments","sale and leaseback / failed sale financing","net investment in the lease","short-term lease election","lease and nonlease components"],"categories":["Leases","Recognition","Initial measurement","Subsequent measurement"],"level":"intermediate","provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:389b1a6a879123a244f4c4325ab7d319e4a7573796ad30e7b05bee803ae5f1ab","downloaded_from":"2026-09-10T01:55:43.879Z","last_downloaded_at":"2026-09-10T01:59:18.312Z","date_scope":"source_page_range","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps"}}