Company: BNRG
Filing Date: 2025-03-04
Form Type: 20-F
Source: 0001213900-25-020178
Chunk: 106

Company: Brenmiller Energy Ltd.
Filing Date: 2025-03-04
Form: 20-F
Item: Item 19
Chunk 106
---
 the lease is the rate implicit in the lease
unless that rate cannot be readily determined, in which case the Company’s uses its estimated incremental borrowing rate based on
the information available at the commencement date.

The Company recognizes a single lease
expense on a straight-line basis over the lease term and reduces the lease liabilities by the payments made. ROU asset amortization,
referred to as non-cash lease expense, along with the change in the operating lease liabilities are separately presented within the cash
flows from operating activities on the consolidated statements of cash flows.

F-15

Brenmiller Energy Ltd.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES: (cont.)

  Leases (cont.):  

Lease liabilities and right-of-use assets are remeasured when there is a change in the lease term or the lease payments.

2) The Company as a lessor

The Company has entered into several
contracts to build TES systems that will be commissioned to customers under long-term lease arrangements with purchase options; these
arrangements typically include certain support services that are accounted for separately under ASC 606.

The Company applies ASC 842: “leases”
to determine whether these transactions are a sale-type or operating-type leases. For that purpose, the Company considers the terms and
conditions of each contract and all relevant terms and circumstances upon commencement of the lease as promulgated in ASC 842-10-25-2.

The Company has determined that the lessee
does not obtain control of the TES systems under construction and that the commencement date for these contracts is when the systems is
functional and provides energy according to established specifications.

At the commencement date:

- for sale type leases, the Company shall
recognize revenue in the aggregated amount of its net investment in the lease and selling profit or selling loss arising from the lease,
and derecognize the underlying asset. The net investment in the lease includes the lease receivable, which is measured at the
present value, discounted using the rate implicit in the lease, and the present value of any unguaranteed residual asset at the end
of the lease.

- For operating leases, the Company shall
defer initial direct costs, and subsequently recognize the lease payments as income in profit or loss over the lease
term on a straight-line basis.

  Retirement and Severance Pay  

The Israeli
Severance Pay Law, 1963 (“ Severance Pay Law”),