2022-009 - Laserfiche WebLink

Home Browse Search

OHL USA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 Note 2 - Summary of Significant Accountinq Policies (cont'd.) As of January 1, 2019, the Company has early adopted and recognizes leases under FASB Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842) ("ASC 842"). The new guidance requires the recognition of right -of -use assets and lease liabilities on the balance sheet for leases with terms greater than 12 months or leases that contain a purchase option that is reasonably certain to be exercised. Lessees are now required to classify leases as either finance or operating. The classifications will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. The Company elected to utilize the package of practical expedients in FASB ASC Subtopic 842-10-65-1(f) that, upon adoption of ASG 842, allows entities to (1) not reassess whether any expired or existing contracts are or contain leases, (2) retain the classification of leases (operating or finance) existing as of the date of adoption, and (3) not reassess initial direct costs for any existing leases. Long-term leases (leases with terms greater than 12 months) are recorded on the balance sheet at the present value of the minimum lease payments not yet paid. The Company uses its incremental borrowing rate to determine the present value of the lease when the rate implicit in the lease is not readily determinable. Certain lease contracts contain nonlease components such as maintenance, utilities, fuel and operator services. The Company has made an accounting policy election, as a:lowed under FASB ASC Subtopic 842-10-15-37, to capitalize both the lease component and nonlease components of its contracts as a single lease component for all of its right -of -use assets. Short-term leases (leases with an initial term of 12 months or less or leases that are cancelable by the lessee and lessor without significant penalties) are not recorded on the balance sheet and are expensed on a straight-line basis over the lease term. The majority of the Company's short-term leases relate to equipment used on construction projects. These leases are entered into at agreed-upon hourly, daily, weekly, or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greate- than 12 months. 21