The Board discussed lease arrangements that give rise to additional obligations of the lessee, including obligations:
- to incur costs to return the leased item
- to return the leased item in a specified condition
- to maintain the leased item.
The Board discussed whether these obligations meet the definition of a liability and, if so, whether the liability exists at the commencement of the lease term, or at some point during the lease term. The Board tentatively decided that obligations to incur costs to return the leased item were liabilities that existed at the commencement of the lease term. The Board also discussed how the debit arising on the recognition of the liability should be treated, how the liability should be measured, and whether the obligations give rise to assets of the lessor.
The Board also discussed variable lease payments, including:
- rentals that are linked to an index such as the consumer price index, or are linked to market rentals
- rentals with a variable element linked to the lessee�s operating or financial performance from the leased item, such as turnover or profit-based rentals
- rentals that increase with the lessee�s additional usage of the leased item, such as excess mileage costs in car leases.
The Board considered whether the variable rentals meet the definition of a liability at the commencement of the lease term and, if so, how the liability should be measured. The Board tentatively decided that for rentals linked to an index or market rentals the lessee had a liability for both the fixed and variable components.
The discussion was primarily for educational purposes only. Except as noted above, no decisions were made.