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Leasing Arrangements | 6 Months Ended
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Mar. 31, 2022
Leases [Abstract] |
Leasing Arrangements | NOTE I – LEASING ARRANGEMENTS Ashland leases certain office buildings, transportation equipment, warehouses and storage facilities, and equipment. Substantially all of Ashland’s leases are operating leases or short-term leases. Real estate leases represented over 80% of the total lease liability at March 31, 2022 and September 30, 2021, respectively. The components of lease cost recognized within the Statements of Consolidated Comprehensive Income (Loss) were as follows:
|  |  |  | Three months ended |  |  | Six months ended |
|  |  |  | March 31 |  |  | March 31 |
(In millions) |  | Location |  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating lease cost |  | Selling, General & Administrative |  | $ | 3 |  |  | $ | 3 |  |  | $ | 6 |  |  | $ | 6 |
Operating lease cost |  | Cost of Sales |  |  | 4 |  |  |  | 3 |  |  |  | 8 |  |  |  | 7 |
Variable lease cost |  | Selling, General & Administrative |  |  | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 1 |
Variable lease cost |  | Cost of Sales |  |  | 1 |  |  |  | 1 |  |  |  | 2 |  |  |  | 2 |
Short-term leases |  | Cost of Sales |  |  | 1 |  |  |  | 1 |  |  |  | 1 |  |  |  | 2 |
Total lease cost |  |  |  | $ | 10 |  |  | $ | 9 |  |  | $ | 19 |  |  | $ | 18 |
The following table summarizes Ashland’s lease assets and liabilities as presented in the Condensed Consolidated Balance Sheet:
(In millions) |  |  |  | March 31 2022 |  |  | September 30 2021 |
Assets |  |  |  |  |  |
Operating lease assets, net |  | $ | 115 |  |  | $ | 124 |
Total lease assets |  | $ | 115 |  |  | $ | 124 |
Liabilities |  |  |  |  |  |
Current operating lease obligations |  | $ | 21 |  |  | $ | 23 |
Non-current operating lease obligations |  |  | 102 |  |  |  | 110 |
Total lease liabilities |  | $ | 123 |  |  | $ | 133 |
Ashland often has options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at Ashland’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at Ashland’s discretion. Ashland evaluates renewal and termination options at the lease commencement date to determine if it is reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for operating leases as of March 31, 2022 and September 30, 2021 was approximately 15 years for each period. 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 the 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 operating lease liabilities as of March 31, 2022 and September 30, 2021 was 2.8%, respectively. There are no leases that have not yet commenced but that create significant rights and obligations. Right-of-use assets exchanged for new operating lease obligations was $3 million and $6 million for the three months ended March 31, 2022 and 2021, respectively, and $4 and $10 million for the six months ended March 31, 2022 and 2021. The following table provides cash paid for amounts included in the measurement of operating lease liabilities:
|  |  |  | Three months ended |  |  | Six months ended |
|  |  |  | March 31 |  |  | March 31 |
(In millions) |  |  |  | 2022 |  |  | 2021 |  |  | 2021 |  |  | 2020 |
Operating cash flows from operating leases |  | $ | 7 |  |  | $ | 7 |  |  | $ | 14 |  |  | $ | 14 |
The following table summarizes Ashland's maturities of lease liabilities as of March 31, 2022 and September 30, 2021:
(In millions) |  |  |  | March 31 2022 |  |  | September 30 2021 |
Remainder of 2022 |  | $ | 26 |  |  | $ | 39 |
2023 |  |  | 21 |  |  |  | 20 |
2024 |  |  | 17 |  |  |  | 16 |
2025 |  |  | 12 |  |  |  | 11 |
2026 |  |  | 10 |  |  |  | 9 |
Thereafter |  |  | 77 |  |  |  | 78 |
Total lease payments |  |  | 163 |  |  |  | 173 |
Less amount of lease payment representing interest |  |  | (40 | ) |  |  | (40 | )
Total present value of lease payments |  | $ | 123 |  |  | $ | 133 |

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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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