Leases

6 Months Ended

Jun. 30, 2020

In March 2016, the FASB issued ASU 2016-02. ASU 2016-02’s core principle is to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information. The primary effect of adopting ASU 2016-02 to the Company was to record right-of-use assets and obligations for the leases classified as operating leases.

Cumberland’s significant operating leases include the lease of approximately 25,500 square feet of office space in Nashville, Tennessee for its corporate headquarters. This lease currently expires in October 2022. The operating leases also include the lease of approximately 14,200 square feet of wet laboratory and office space in Nashville, Tennessee by CET, our majority-owned subsidiary, where it operates the CET Life Sciences Center. This lease currently expires in April 2023.

Operating lease liabilities are recorded as the present value of remaining lease payments not yet paid for the lease term discounted using the incremental borrowing rate associated with each lease. Operating lease right-of-use assets represent operating lease liabilities adjusted for lease incentives and initial direct costs. As Cumberland’s leases do not contain implicit borrowing rates, the incremental borrowing rates were calculated based on information available at January 1, 2019. Incremental borrowing rates reflect the Company’s estimated interest rates for collateralized borrowings over similar lease terms. The weighted-average incremental borrowing rate used to discount the present value of the remaining lease payments is 7.42%. The weighted-average remaining lease term at June 30, 2020 is 2.5 years.

Lease Position

At June 30, 2020 and December 31, 2019 , the Company's lease assets and liabilities were as follows:


Right-of-Use Assets	June 30, 2020		December 31, 2019
Operating lease right-of-use assets	$	2,502,850	$	2,960,569


Lease Liabilities	June 30, 2020		December 31, 2019
Operating lease current liabilities	$	967,656	$	920,431

Operating lease noncurrent liabilities	1,580,203		2,076,472
Total	$	2,547,859	$	2,996,903


Maturity of Leases Liabilities at June 30, 2020	Operating Leases
2020	$	566,713
2021	1,144,889
2022	1,019,313
2023	92,478
After 2023	—
Total lease payments	2,823,393
Less: Interest	(275,534)
Present value of lease liabilities	$	2,547,859