ASC 842/ IFRS 16/ GASB 87
“The noncancellable period for which a Lessee has the right to use an underlying asset, together with all of the following:
- Periods covered by an option to extend the lease if the Lessee is reasonably certain to exercise that option
- Periods covered by an option to terminate the lease if the Lessee is reasonably certain not to exercise that option
- Periods covered by an option to extend (or not to terminate) the lease in which exercise of the option is controlled by the ” [842-10-20, IFRS 16 omits clause c]
FAS 13
“The fixed noncancelable term of the lease plus:
“(a) all periods, if any, covered by bargain renewal options,
“(b) all periods, if any, for which failure to renew the lease imposes a penalty on the Lessee in such amount that a renewal appears, at the inception of the lease, to be reasonably assured,
“(c) all periods, if any, covered by ordinary renewal options† during which a guarantee by the Lessee of the Lessor’s debt directly or indirectly related to the leased property is expected to be in effect or a loan from the Lessee to the Lessor directly or indirectly related to the leased property is expected to be outstanding,
“(d) all periods, if any, covered by ordinary renewal options preceding the date as of which a
bargain purchase option is exercisable, and
“(e) all periods, if any, representing renewals or extensions of the lease at the Lessor’s option;
“however, in no case shall the lease term be assumed to extend beyond the date a bargain purchase option becomes exercisable. A lease that is cancelable (1) only upon the occurrence of some remote contingency, (2) only with the permission of the Lessor, (3) only if the Lessee enters into a new lease with the same Lessor, or (4) only if the Lessee incurs a penalty in such amount that continuation of the lease appears, at inception, reasonably assured shall be considered ‘noncancelable’ for purposes of this definition.”
“The phrase indirectly related to the leased property is used in this paragraph to describe provisions of conditions that in substance are guarantees of the Lessor’s debt or loans to the Lessor by the Lessee that are related to the leased property but are structured in such a manner that they do not represent a direct guarantee or loan. Examples include a party related to the Lessee guaranteeing the Lessor’s debt on behalf of the Lessee, or the Lessee financing the Lessor’s purchase of the leased asset using collateral other than the leased property.”