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Leases | 9 Months Ended
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Jul. 31, 2020
Leases [Abstract] |
Leases |
14. | Leases
We review new contracts to determine if the contracts include a lease. To the extent a lease agreement includes an extension option that is reasonably certain to be exercised, we have recognized those amounts as part of the right-of-use assets and lease liabilities. We combine lease and non-lease components, such as common area maintenance, in the calculation of the lease assets and related liabilities. As most lease agreements do not provide an implicit rate, we use an incremental borrowing rate (IBR) based on information available at the lease commencement date in determining the present value of lease payments and to help classify the lease as operating or financing. We calculate the IBR based on a bond yield curve which considers secured borrowing rates based on our credit rating and current economic environment, as well as other publicly available data. We lease certain manufacturing facilities, warehouse space, machinery and equipment, and vehicles. We often have options to renew lease terms for buildings and other assets. We evaluate renewal and termination options at the lease commencement date to determine if we are reasonably certain to exercise the option on the basis of economic factors. Leases with an initial term of 12 months or less (short-term l eases) are not recorded on the Consolidated Balance S heet. Lease expense for operating leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payment s occur. Variable payments for leases primarily relate to future rates or amounts, miles, or other quantifiable usage factors which are not determinable at the time the lease agreement commences. Finance lease assets are recorded in Property, plant, and equipment – net on the Consolidated Balance Sheet. As of July 31, 2020, we have no material leases that have yet to commence. Additional lease information is summarized below for the three and nine months ended July 31, 2020:
|  | Three months ended |  |  | Nine months ended |
|  | July 31, 2020 |  |  | July 31, 2020 |
|  | Finance Leases |  |  | Operating Leases |  |  | Finance Leases |  |  | Operating Leases |
Amortization of right of use assets |  | $ | 1,779 |  |  | $ | — |  |  | $ | 5,293 |  |  | $ | — |
Interest |  |  | 93 |  |  |  | — |  |  |  | 266 |  |  |  | — |
Lease cost(1) |  |  | 1,872 |  |  |  | 5,406 |  |  |  | 5,559 |  |  |  | 16,073 |
Short-term and variable lease cost(1) |  |  | 200 |  |  |  | 617 |  |  |  | 1,023 |  |  |  | 1,917 |
Total lease cost |  | $ | 2,072 |  |  | $ | 6,023 |  |  | $ | 6,582 |  |  | $ | 18,000 |
| (1) | Lease costs are recorded in both Cost of sales and Selling and administrative expenses on the Consolidated Statements of Income.
Supplemental cash flow information is summarized below for the nine months ended July 31, 2020:
|  | Finance Leases |  |  | Operating Leases |
Cash outflows for leases |  | $ | 5,814 |  |  | $ | 15,935 |
Weighted average remaining lease term (years) |  | 4.72 years |  |  | 10.48 years |
Weighted average discount rate |  |  | 2.51 | % |  |  | 1.69 | %
The following table reconciles the undiscounted cash flows for five years and thereafter to the operating and finance lease liabilities recognized on the statement of financial position as of July 31, 2020. The reconciliation excludes short-term leases that are not recognized on the Consolidated Balance Sheet.
Year: |  | Finance Leases |  |  | Operating Leases |
2020 |  | $ | 6,479 |  |  | $ | 20,709 |
2021 |  |  | 4,445 |  |  |  | 19,056 |
2022 |  |  | 2,735 |  |  |  | 16,106 |
2023 |  |  | 1,130 |  |  |  | 14,163 |
2024 |  |  | 669 |  |  |  | 12,160 |
Later years |  |  | 3,210 |  |  |  | 68,085 |
Total minimum lease payments |  | $ | 18,668 |  |  | $ | 150,279 |
Amounts representing interest |  |  | 1,462 |  |  |  | 14,034 |
Present value of minimum lease payments |  | $ | 17,206 |  |  | $ | 136,245 |

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