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Polarization involves
Lease Term
The fixed, non-cancellable period during which a lessee has the right to use an asset, plus any options to extend or terminate the lease if reasonably certain to be exercised.
Lease Criteria
The conditions and standards that a contract must meet for it to be classified as a lease under accounting standards.
Incremental Borrowing Rate
The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term to lease a similar asset, relevant in lease accounting.
Capital Lease
A lease agreement that has the characteristics of a purchase agreement, where the lessee assumes most of the risks and rewards of ownership.
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