Lease payments are the amounts included in classification and measurement for the supported lease term. They are a rule-based population, not the total of every invoice tied to the contract.
Build the payment stream
Include fixed and in-substance fixed payments, less lease incentives. Include index- or rate-based variable payments measured with the commencement-date index or rate. Also include a reasonably certain purchase-option price, applicable termination penalties, and the lessee's probable payment under a residual value guarantee. Preserve whether payments occur in advance or arrears. Exclude usage- or performance-based variable payments until the event that creates the obligation. Exclude amounts allocated to nonlease components unless an election combines them.
Assume annual base rent is $25,000 plus $2 for each unit produced. The $25,000 fixed amount enters initial measurement. The production charge generally reaches expense when production occurs. If rent instead changes with an index, initial measurement uses the index level at commencement and later accounting follows the remeasurement rules.
The payment population depends on component and term decisions already made. It does not choose the discount rate or prove classification. Read the included-payment list in ASC 842-10-30-5 and the exclusions in ASC 842-10-30-6.
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Analyze this concept
- Build a dated included-payment stream from fixed and in-substance fixed payments, index or rate terms, incentives, purchase and termination terms, and applicable residual guarantees while retaining excluded variable amounts separately.
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Build on these ideas
- Lease and nonlease components — Apply
To analyze this concept: Required. Consideration must be allocated before the lease payment stream is measured.
- Lease term and options — Analyze
To analyze this concept: Required. Term and option conclusions determine which payment dates are included.
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Use this idea next
- Lease liability — Apply
Required level here: analyze. Required. The liability begins with the included unpaid payment stream.
- Lease residual value — Analyze
Required level here: analyze. Required. Residual guarantees can enter the payment population differently by role.
- Lessee lease classification — Analyze
Required level here: analyze. Required. The present-value criterion uses the included payment population.