Which of the following is an example of a variable lease payment that is only recognized subsequent to the lease commencement date when the event or condition that triggers those payments occur?
Payments that are in-substance fixed payments
Payments linked to a current consumer price index
Payments linked to a benchmark interest rate
Payments linked to performance targets
Payments linked to performance targets are an example of a variable lease payment that is only recognized subsequent to the lease commencement date when the event or condition that triggers those payments occur. Such payments are variable in nature and depend on the lessee's performance, hence, they are only recognized as an expense or capitalized in the relevant asset cost when the performance target is achieved, which triggers the payment.
