a. Commencement of the lease term - is the date from which the lessee is entitled to exercise its right to use the leased asset. It is the date of initial recognition of the lease (i.e. the recognition of the asset, liabilities, revenue or expenses resulting from the lease, as appropriate).
b. Contingent Rent - is that portion of the lease payments that is not fixed in amount but is based on the future amount of a factor that changes other than the passage of time (e.g., percentage of future sales, amount of future use, future price indices, future market rates of interest).
c. Economic life - is either:
d. Finance Lease - is a lease that transfers substantially all the risks and rewards incidental to ownership of an asset to the lessee. Title may or may not eventually be transferred.
1. The period over which an asset is expected to yield economic benefits or service potential to one or more users; or
2. The number of production or similar units expected to be obtained from the asset by one or more users.
e. Gross Investment in the Lease - is the aggregate of:
1. The minimum lease payments receivable by the lessor under a finance lease; and
2. Any unguaranteed residual value accruing to the lessor.
f. Guaranteed Residual Value - is:
1. For a lessee, that part of the residual value that is guaranteed by the lessee or by a party related to the lessee (the amount of the guarantee being the maximum amount that could, in any event, become payable); and
2. For a lessor, that part of the residual value that is guaranteed by the lessee or by a third party unrelated to the lessor that is financially capable of discharging the obligation under the guarantee.