right to control the use

Broad Transactions1

1. 842-10Overall842 Leases

   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).