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Leasing Arrangements | 3 Months Ended
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Dec. 31, 2019
Leases [Abstract] |
Leasing Arrangements | NOTE I – LEASING ARRANGEMENTS Ashland determines if an arrangement is or contains a lease at contract inception and determine its classification as an operating or finance lease at lease commencement. Ashland leases certain office buildings, transportation equipment, warehouses and storage facilities, and equipment. All of Ashland’s leases are operating leases. Real estate leases represent approximately 87% of the total lease liability. Operating lease assets and obligations are reflected within operating lease assets, net, current operating lease obligations, and non-current operating lease obligations captions on the Condensed Consolidated Balance Sheets. Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Statements of Consolidated Comprehensive Income (Loss) were as follows:
(In millions) | Location | Three months ended December 31, 2019 |
Lease cost: |  |  |  |
Operating lease cost | Selling, General & Administrative | $ | 5 |
Operating lease cost | Cost of Sales |  | 4 |
Variable lease cost | Selling, General & Administrative |  | — |
Variable lease cost | Cost of Sales |  | 1 |
Short-term leases | Selling, General & Administrative |  | — |
Total operating lease cost |  | $ | 10 |
The following table summarizes Ashland’s lease assets and liabilities as presented in the December 31, 2019 Condensed Consolidated Balance Sheet:
(In millions) | December 31 2019 |
Assets |  |  |
Operating lease assets | $ | 157 |
Total lease assets |  | 157 |
Liabilities |  |  |
Current operating lease obligations | $ | 24 |
Non-current operating lease obligations |  | 143 |
Total lease liabilities | $ | 167 |
Ashland often has options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at our sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at our discretion. Ashland evaluates 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. The weighted average remaining lease term for our operating leases as of December 31, 2019 was 16 years. Residual value guarantees are not common within Ashland’s lease agreements nor are restrictions or covenants imposed by leases. Ashland has elected the practical expedient to combine lease and non-lease components. The discount rate implicit within our leases is generally not determinable. Therefore, Ashland determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate is determined using a buildup method resulting in an estimated range of secured borrowing rates matching the lease term and the currency of the jurisdiction in which lease payments are made, adjusted for impacts of collateral. Consideration was given to Ashland’s own relevant debt issuances as well as debt instruments of comparable companies with similar credit characteristics. The weighted average discount rate used to measure our operating lease liabilities as of December 31, 2019 was 2.9%. There are no leases that have not yet commenced but that create significant rights and obligations for Ashland. Right-of-use assets exchanged for new operating lease obligations was less than $1 million for the three months ended December 31, 2019. Cash paid for amounts included in the measurement of operating lease liabilities:
(In millions) |  | As of December 31, 2019 |
Operating cash flows from operating leases |  | $ | 9 |
Maturity Analysis of Lease Liabilities Maturities of lease liabilities are shown below as of December 31, 2019:
(In millions) |  | As of December 31, 2019 |
Remainder of 2020 |  | $ | 21 |
2021 |  |  | 27 |
2022 |  |  | 34 |
2023 |  |  | 15 |
2024 |  |  | 13 |
Thereafter |  | $ | 110 |
Total lease payments |  |  | 220 |
Less amount of lease payment representing interest |  |  | (53 | )
Total present value of lease payments |  | $ | 167 |
As of September 30, 2019, under the previous guidance, the future minimum rental payments are as follows:
(In millions) |  | As of September 30, 2019 |
2020 |  | $ | 29 |
2021 |  |  | 27 |
2022 |  |  | 34 |
2023 |  |  | 15 |
2024 |  |  | 13 |
Thereafter |  |  | 110 |
Total lease payments |  | $ | 228 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 842 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=77888251 + Details
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