Document ID: chunk:federal_register_of_legislation:F2024C00049:body:0:p24
Version: federal_register_of_legislation:F2024C00049
Segment Type: other
Provision Reference: 
Character Range: 59899–63113

lessee or a third party unrelated to the lessor that is financially capable of discharging the obligations under the guarantee. Lease payments do not include payments allocated to non-lease components.
lease term                                          The non-cancellable period for which a lessee has the right to use an underlying asset, together with both:
                                                    (a) periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option; and
                                                    (b) periods covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
lessee                                              An entity that obtains the right to use an underlying asset for a period of time in exchange for consideration.
lessee's incremental borrowing rate                 The rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment.
lessor                                              An entity that provides the right to use an underlying asset for a period of time in exchange for consideration.
net investment in the lease                         The gross investment in the lease discounted at the interest rate implicit in the lease.
operating lease                                     A lease that does not transfer substantially all the risks and rewards incidental to ownership of an underlying asset.
optional lease payments                             Payments to be made by a lessee to a lessor for the right to use an underlying asset during periods covered by an option to extend or terminate a lease that are not included in the lease term.
period of use                                       The total period of time that an asset is used to fulfil a contract with a customer (including any non-consecutive periods of time).
residual value guarantee                            A guarantee made to a lessor by a party unrelated to the lessor that the value (or part of the value) of an underlying asset at the end of a lease will be at least a specified amount.
right-of-use asset                                  An asset that represents a lessee's right to use an underlying asset for the lease term.
short-term lease                                    A lease that, at the commencement date, has a lease term of 12 months or less. A lease that contains a purchase option is not a short-term lease.
sublease                                            A transaction for which an underlying asset is re-leased by a lessee ('intermediate lessor') to a third party, and the lease ('head lease') between the head lessor and lessee remains in effect.
underlying asset                                    An asset that is the subject of a lease, for which the right to use that asset has been provided by a lessor to a lessee.
unearned finance income                             The difference between:
                                                    (a) the gross investment in the