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Leases (Notes) | 12 Months Ended
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Dec. 31, 2020
Leases [Abstract] |
Leases | Leases We adopted a comprehensive new lease accounting standard effective January 1, 2019. The details of the significant changes to our accounting policies resulting from the adoption of the new standard are set out below. We adopted the standard using the optional modified retrospective transition method; accordingly, the comparative information as of December 31, 2018 and for the year ended December 31, 2018 has not been adjusted and continues to be reported under the previous lease standard. Under the new lease standard, assets and liabilities that arise from all leases are required to be recognized on the balance sheet for lessees. Previously, only capital leases, which are now referred to as finance leases, were recorded on the balance sheet. The adoption of this standard resulted in the recognition of approximately $1.0 billion of operating lease right-of-use assets and operating lease liabilities on our consolidated balance sheet as of January 1, 2019. The adoption of this standard did not materially impact our consolidated results of operations for the year ended December 31, 2019. Beginning January 1, 2019, for all leases with a term in excess of 12 months, we recognized a lease liability equal to the present value of the lease payments and a right-of-use asset representing our right to use the underlying asset for the lease term. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term and accretion of the lease liability, while finance leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, we elected the practical expedient to not recognize lease assets and liabilities. We recognize lease expense for these short-term leases on a straight-line basis over the lease term. We are a lessee for numerous operating leases, primarily related to real estate, transportation, and equipment. The vast majority of our operating leases have remaining lease terms of 10 years or less, some of which include options to extend the leases, and some of which include options to terminate the leases. We generally do not include renewal or termination options in our assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain. The accounting for some of our leases may require judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in our net present value calculation of lease payments for lease agreements which do not provide an implicit rate, and assessing the likelihood of renewal or termination options. We also have some lease agreements with lease and non-lease components, which are generally accounted for as a single lease component. For certain equipment leases, such as offshore vessels and drilling rigs, we account for the lease and non-lease components separately. The following tables illustrate the financial impact of our leases as of and for the years ended December 31, 2020 and December 31, 2019, along with other supplemental information about our existing leases:
| Year Ended December 31
Millions of dollars | 2020 | 2019
Components of lease expense: |  |
Finance lease cost: |  |
Amortization of right-of-use assets | $ | 19 |  | $ | 19 |
Interest on lease liabilities | 32 |  | 51 |
Operating lease cost | 296 |  | 355 |
Short-term lease cost | 31 |  | 110 |
Sublease income | (4) |  | (5) |
Total lease cost | $ | 374 |  | $ | 530 |
For the year ended December 31, 2018, total rentals on our operating leases under the previous lease standard, net of sublease rentals, was $680 million.
| As of December 31
Millions of dollars | 2020 | 2019
Components of balance sheet: |  |
Operating leases: |  |
Operating lease right-of-use assets (non-current) | $ | 786 |  | $ | 931 |
Current portion of operating lease liabilities | 251 |  | 208 |
Operating lease liabilities (non-current) | 758 |  | 825 |
Finance leases: |  |
Other assets (non-current) | $ | 113 |  | $ | 123 |
Other current liabilities | 24 |  | 19 |
Other liabilities (non-current) | 118 |  | 124 |
During the years ended December 31, 2020 and December 31, 2019, impairment charges were recorded related to operating and finance lease right-of-use assets totaling $191 million and $139 million, respectively. See Note 2 to the consolidated financial statements for further discussion on impairments and other charges.
| Year Ended December 31
Millions of dollars except years and percentages | 2020 | 2019
Other supplemental information: |  |
Cash paid for amounts included in the measurement of lease liabilities: |  |
Operating cash flows from operating leases | $ | 299 |  | $ | 316 |
Operating cash flows from finance leases | 32 |  | 51 |
Financing cash flows from finance leases | 21 |  | 24 |
Right-of-use assets obtained in exchange for lease obligations: |  |
Operating leases (a) | $ | 447 |  | $ | 1,362 |
Finance leases | 39 |  | 74 |
Weighted-average remaining lease term: |  |
Operating leases | 8.6 years | 9.5 years
Finance leases | 6.4 years | 5.4 years
Weighted-average discount rate for operating leases | 4.1 | % | 4.4 | %
(a) The 2019 balance primarily consists of operating lease right-of-use assets exchanged for lease obligations upon implementation of the new lease accounting standard on January 1, 2019. The following table summarizes the maturity of our operating and finance leases as of December 31, 2020:
Millions of dollars | Operating Leases | Finance Leases
2021 | $ | 287 |  | $ | 63 |
2022 | 233 |  | 63 |
2023 | 146 |  | 62 |
2024 | 94 |  | 49 |
2025 | 70 |  | 38 |
Thereafter | 428 |  | 55 |
Total lease payments | 1,258 |  | 330 |
Less imputed interest | (249) |  | (188) |
Total | $ | 1,009 |  | $ | 142 |

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- Definition The entire disclosure for lessee entity's leasing arrangements including, but not limited to, all of the following: (a.) The basis on which contingent rental payments are determined, (b.) The existence and terms of renewal or purchase options and escalation clauses, (c.) Restrictions imposed by lease agreements, such as those concerning dividends, additional debt, and further leasing. + References Reference 1: http://fasb.org/us-gaap/role/ref/otherTransitionRef -Publisher FASB -Name Accounting Standards Codification -Topic 840 -URI http://asc.fasb.org/topic&trid=2208923 + Details
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