Combine Number Lease For Free

Examples of nonlease components Operating the leased asset on behalf of the lessee. Training lessee personnel to operate the asset. Repair or maintenance of the leased asset. Security services. Consumables/supplies. Management services.

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.

PRACTICAL EXPEDIENT NOT TO SEPARATE A lessee may elect as an accounting policy election by asset class, to not separate nonlease components from lease components and instead, to account for each separate lease component and nonlease components associated with that lease component as a single lease component.

Companies choosing not to apply the practical expedient to combine lease and nonlease components into a single component will be required to allocate the contract consideration to each of the individual lease and nonlease components on a relative standalone price basis.

The lease component is the unit of account for lease accounting. Lessors and lessees need to identify, and generally separate, lease and non-lease components to apply the new standard. To do this, they need to allocate the consideration in the contract between the components that they account for separately.

You determine if a lease has separate lease components by considering the interdependencies of individual assets covered in a contract. A key consideration is whether the supplier will use multiple assets, or a group of assets that work together, to fulfill the arrangement.

Generally, a government should account for the lease and non-lease components of a lease as separate contracts. If a lease involves multiple underlying assets, lessees and lessors in certain cases should account for each underlying asset as a separate lease contract.