We lease certain locomotives, freight cars, and other property for use in our rail operations. We determine if an arrangement is or contains a lease at inception. We have lease agreements with lease and non-lease components and we have elected to not separate lease and non-lease components for all classes of underlying assets. Leases with an initial term of 12 months or less are not recorded on our Consolidated Statements of Financial Position; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our Consolidated Statement of Financial Position. Operating leases are included in operating lease assets, accounts payable and other current liabilities, and operating lease liabilities on our Consolidated Statements of Financial Position. Finance leases are included in net properties, debt due within one year, and debt due after one year on our Consolidated Statements of Financial Position.

Operating lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use a collateralized incremental borrowing rate for all operating leases based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Operating lease expense is recognized on a straight-line basis over the lease term and reported in equipment and other rents and financing lease expense is recorded as depreciation and interest expense in our Consolidated Statements of Income.



		Sep. 30,		Dec. 31,
Millions	Classification	2020		2019
Assets
Operating leases	Operating lease assets	$	1,642	$	1,812
Finance leases	Net properties [a]		444		468
Total leased assets		$	2,086	$	2,280
Liabilities
Current
Operating leases	Accounts payable and other current liabilities	$	308	$	362
Finance leases	Debt due within one year		95		114
Noncurrent
Operating leases	Operating lease liabilities		1,293		1,471
Finance leases	Debt due after one year		374		491
Total lease liabilities		$	2,070	$	2,438

[a] Finance lease assets are recorded net of accumulated amortization of $723 million and $797 million as of September 30, 2020, and December 31, 2019.



		Three Months Ended				Nine Months Ended
		September 30,				September 30,
Millions	Classification	2020		2019		2020		2019
Operating lease cost [a]	Equipment and other rents	$	70	$	75	$	207	$	253
Finance lease cost
Amortization of leased assets	Depreciation		16		18		50		54
Interest on lease liabilities	Interest expense		7		9		21		26
Net lease cost		$	93	$	102	$	278	$	333

[a] Includes short-term lease costs of $0.6 million and $0.1 million for the three months ended September 30, 2020 and 2019, respectively, and $1.4 million and $0.5 million for the nine months ended September 30, 2020 and 2019, respectively, and variable lease costs of $1.8 million and $2.3 million for the three months ended September 30, 2020 and 2019, respectively, and $5.0 million and $6.3 million for the nine months ended September 30, 2020 and 2019, respectively.

The following table presents aggregate lease maturities as of September 30, 2020:



Millions		Operating Leases		Finance Leases		Total
2020	$	41	$	15	$	56
2021		304		141		445
2022		269		115		384
2023		226		81		307
2024		218		68		286
After 2024		784		122		906
Total lease payments	$	1,842	$	542	$	2,384
Less: Interest		241		73		314
Present value of lease liabilities	$	1,601	$	469	$	2,070

The following table presents the weighted average remaining lease term and discount rate:



	Sep. 30,
	2020
Weighted-average remaining lease term (years)
Operating leases		8.1
Finance leases		5.5
Weighted-average discount rate (%)
Operating leases		3.7
Finance leases		5.2

The following table presents other information related to our operating and finance leases:



Millions,
for the Nine Months Ended September 30,	2020		2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	313		315
Operating cash flows from finance leases		25		30
Financing cash flows from finance leases		102		102
Leased assets obtained in exchange for finance lease liabilities		-		-
Leased assets obtained in exchange for operating lease liabilities		54		62