Which of the following are included in lease payments? Select all that apply.
Fixed payments, including in-substance fixed payments
Any penalties incurred to terminate the lease, if the termination is reflected in the lease term
Variable lease payments that depend on usage of the underlying asset
The exercise price of a purchase option, if the lessee is reasonably certain to exercise the option
Lease payments typically include:
- Fixed payments, including in-substance fixed payments
- Variable lease payments that depend on usage of the underlying asset
However, certain elements are not included in lease payments, such as: - Any penalties incurred to terminate the lease, if the termination is reflected in the lease term, are not considered part of lease payments as they represent costs associated with exiting the lease rather than the ongoing lease obligation.
The exercise price of a purchase option is also typically not included in lease payments if the lessee is reasonably certain to exercise the option, as this would indicate a separate transaction, not part of the original lease agreement.
