Separation Anxiety: Lease vs Non-Lease Components


Separation Anxiety

Lease and Non-Lease Components

Under the new standards, when reporting a lease, companies have the option of choosing whether or not to separate out lease and non-lease components by asset class. There are pros and cons associated with separating the components.

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Learn about the lease and
non-lease component practical

  • Pros and cons
  • Components to real estate lease
  • The deal structure
  • The valuation
  • Sample calculation

Capitalizing more on
the balance sheet

Potentially triggering
a finance lease

Potentially triggering
an impairment

Components of a real estate lease

The costs that may be included in a lease tend to fall into three different categories, a lease component, which transfers the right to use the underlying asset, a non-lease component, which transfers a good or service that is not required for use of the underlying asset, and costs that are not considered components because they do not transfer a good or service. Some common costs you may see on a real estate lease are:

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