Right to control use

A customer controls an identified asset's use only when two conditions are met. The customer obtains substantially all economic benefits from use and directs how and for what purpose the asset is used throughout the period.

Separate benefits from decisions

Benefits can include primary output, by-products, commercial gains, and the right to sublease. Payments made to the supplier from asset output do not remove benefits that the customer first obtains. Direction depends on the decisions that most affect those benefits, such as what the asset produces, when it operates, where it operates, and at what capacity. Supplier safety rules and maintenance instructions are protective when they preserve the asset without deciding its economic use.

Suppose a customer has exclusive use of a packaging line and chooses products, shifts, and production volume. The supplier performs maintenance and sets safe speed limits. The customer obtains the output and makes the relevant use decisions, so those facts support customer control. Physical possession alone would not reach that conclusion.

When how and for what purpose are predetermined, apply the separate operating-right and design tests. Do not use this concept to decide lease classification or measurement. Read the economic-benefits test in ASC 842-10-15-17 and the direction-of-use requirements in ASC 842-10-15-20.