We adopted ASU No.

2016-02,

Leases (Topic 842)

, which requires leases with durations greater than 12 months to be recognized on the balance sheet, effective January 1, 2019, using the modified retrospective approach. Prior period financial statement amounts and disclosures have not been adjusted to reflect the provisions of the new standard. We elected the package of transition provisions available which allowed us to carryforward our historical assessments of (1) whether contracts are or contain leases, (2) lease classification and (3) initial direct costs.

We lease property and equipment under finance and operating leases. For leases with terms greater than 12 months, we record the related

right-of-use

assets and

right-of-use

obligations at the present value of lease payments over the term. Many of our leases include rental escalation clauses and renewal options that are factored into our determination of lease payments when appropriate. We do not separate lease and nonlease components of contracts.

Generally, we use our estimated incremental borrowing rate to discount the lease payments based on information available at lease commencement, as most of our leases do not provide a readily determinable implicit interest rate.

The following table presents our lease-related assets and liabilities at June 30, 2019 (dollars in millions):


	Balance Sheet Classification		June 30, 2019
Assets:
Operating leases		Right-of-use operating lease assets	$	1,787
Finance leases		Property and equipment		598

Total lease assets			$	2,385

Liabilities:
Current:
Operating leases		Other accrued expenses	$	339
Finance leases		Long-term debt due within one year		90
Noncurrent:
Operating leases		Right-of-use operating lease obligations		1,460
Finance leases		Long-term debt		447

Total lease liabilities			$	2,336

Weighted-average remaining term:
Operating leases				11.5 years
Finance leases				9.9 years
Weighted-average discount rate:
Operating leases(1)				5.5	%
Finance leases				6.2	%

(1)	Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

The following table presents certain information related to lease expense for finance and operating leases for the quarter and six months ended June 30, 2019 (dollars in millions):


	2019
	Quarter		Six Months
Finance lease expense:
Amortization of leased assets	$	20	$	37
Interest on lease liabilities		9		15
Operating leases(2)		99		193
Short-term lease expense(2)		75		153
Variable lease expense(2)		35		74

	$	238	$	472

(2)	Expenses are included in “other operating expenses” in our condensed consolidated income statements.

Other Information

The following table presents supplemental cash flow information for the six months ended June 30, 2019 (dollars in millions):


	2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	267
Operating cash flows for finance leases		15
Financing cash flows for finance leases		37

Maturities of Lease Liabilities

The following table reconciles the undiscounted cash flows to the finance lease liabilities and operating lease liabilities recorded on the balance sheet at June 30, 2019 (dollars in millions):


	Operating Leases			Finance Leases
Year 1	$	400		$	115
Year 2		375			102
Year 3		282			99
Year 4		223			62
Year 5		174			60
Thereafter		1,210			293

Total minimum lease payments		2,664			731
Less: amount of lease payments representing interest		(865	)		(194	)

Present value of future minimum lease payments		1,799			537
Less: current obligations under leases		(339	)		(90	)

Long-term lease obligations	$	1,460		$	447