eBook

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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Asset

Learn about the lease and
non-lease component practical
expedient

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

Capitalizing more on the balance sheet

icon finance

Potentially triggering a finance lease

icon impairment

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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