Page 528 - FortWorthFY23AdoptedBudget

• Payments for penalties for terminating the lease if the lease term reflects the lessee
exercising (1) an option to terminate the lease or (2) a fiscal funding or cancellation
clause
• Any lease incentives receivable from the lessor
• Any other payments that are reasonably certain of being required based on an
assessment of all relevant factors
Lease Receivable
A lessor initially will measure the lease receivable at the present value of lease payments
expected to be received during the lease term, reduced by any provision for estimated
uncollectible amounts. Measurement of the lease receivable include the following:

• Fixed payments
• Variable payments that depend on an index or rate, initially measured using the
index or rate as of the lease term’s commencement
• Variable payments that are fixed in substance
• RVG payments that are fixed in substance
• Any lease incentives payable to the lessee

XI. Payments

• Fixed payments
• Variable payments that depend on an index or rate, initially measured using the
index or rate as of the lease term’s commencement
• Variable payments that are fixed in substance
Lessee
Fixed rate payment is an unchanging rate charged on a liability, such as a loan or mortgage
and receivable, such as a rent from a property owned. It might apply during the entire term
of the loan or for just part of the term, but it remains the same throughout a set period.

Variable payment depends on the lessee’s future performance or usage of the underlying
asset do not have a baseline measurement at lease term commencement and are excluded
from the initial liability, e.g., copier lease payments contingent on copier usage or rental
car payments dependent on miles incurred. However, any minimum guarantee amounts or
other portions of variable payments that are fixed in substance, i.e., they can be readily
measured, are to be included in the lease liability.
Lessor
Fixed rate payment will record a lease receivable and recognize inflows of resources, e.g.,
revenue, at the time a not-fixed-in-substance RVG’s guarantee payment is required—as
agreed to by the lessee and lessor—and the amount can be reasonably estimated. Amounts
to be received for the exercise price of a purchase option or penalty for lease termination
will be recognized as a receivable and an inflow of resources, e.g., revenue, when those
options are exercised.

Variable payments will be recognized as inflows of resources, e.g., revenue, in the period
to which those payments relate. Examples include variable payments based on a percentage
of airport terminal restaurant sales or vendor stall sales at government-owned sports
stadiums.

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