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LEASES | 6 Months Ended
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Mar. 31, 2020
Leases [Abstract] |
LEASES | LEASES AND GAIN ON SALE OF ASSET On October 1, 2019, the Company adopted ASU No. 2016-02, “Leases (Topic 842),” using the modified retrospective transition approach and applied the new standard to leases in place as of the adoption date. Results for reporting periods prior to October 1, 2019 have not been adjusted. The Company elected the package of practical expedients allowed upon adoption of Accounting Standards Codification (“ASC”) 842 which, among other things, allowed us to (1) not reassess whether any expired or existing contracts contain leases, (2) carry forward the historical lease classification, and (3) not have to reassess any initial direct cost of any expired or existing leases. As a result of the adoption of ASC 842, the Company recorded operating lease right-of-use (“ROU”) assets of $2,589,000 and corresponding total operating lease liabilities of $2,589,000 in the Condensed Consolidated Balance Sheets as of October 1, 2019. There was no impact to retained earnings or the Condensed Consolidated Statements of Operations. In March 2020, the Company sold its leasehold interest in a three-quarter of an acre contract drilling segment maintenance and storage yard in Honolulu, Hawaii to an unrelated third party for a $1,100,000 cash payment. As a result of the sale transaction, the Company recognized a gain of $1,336,000, inclusive of a $236,000 gain from the reversal of the storage yard's lease liability in excess of the right-of-use asset, in the quarter ended March 31, 2020. The Company’s remaining ROU assets and lease liabilities at March 31, 2020, primarily relate to non-cancelable operating leases for our Canadian office space and our leasehold land interest for Lot 4C held by Kaupulehu Developments. Management determines if a contract is or contains a lease at inception of the contract or modification of the contract. A contract is or contains a lease if the contract conveys the right to control the use of the asset for a period in exchange for consideration. Operating lease ROU assets and liabilities are recognized based on the present value of future minimum lease payments over the expected lease term at commencement date. The Company’s leases do not provide a readily determinable implicit rate; therefore, management uses the Company’s incremental borrowing rate to discount lease payments based on information available at lease commencement. Our lease terms may include options to extend or terminate the lease when it is reasonably certain we will exercise that potion. Lease expense for minimum lease payments is recognized on a straight-line basis over the expected lease terms. The Company has lease agreements with lease and non-lease components and the non-lease components are excluded in the calculation of the ROU asset and lease liability and expensed as incurred. None of the Company’s lease agreements contain material residual value guarantees or material restrictions or covenants. A ROU asset and corresponding lease liability is not recorded for leases with an initial term of 12 months or less (short-term leases) as the Company recognizes lease expense for these leases as incurred over the lease term. Leases recorded on the balance sheet consist of the following:
|  | March 31, 2020
Assets: |
| Operating lease right-of-use assets | $ | 292,000 |
| Total right-of-use assets | $ | 292,000 |
Liabilities: |
| Current portion of operating lease liabilities | $ | 102,000 |
| Operating lease liabilities | 196,000 |
| Total lease liabilities | $ | 298,000 |
The components of lease expenses are as follows:
| Three months ended March 31, 2020 |  | Six months ended March 31, 2020
Operating lease cost | $ | 101,000 |  |  | $ | 203,000 |
Short-term lease cost | 18,000 |  |  | 35,000 |
Total lease cost | $ | 119,000 |  |  | $ | 238,000 |
Supplemental information related to leases is as follows:
|  | March 31, 2020
Cash paid for amounts included in the measurement of lease liabilities: |
| Operating cash flows for operating leases | $ | 128,000 |
Operating leases: |
| Weighted-average remaining lease term (in years) | 3.8
| Weighted-average discount rate | 5.84%
The remaining lease payments for our operating leases as of March 31, 2020, are as follows:
Fiscal year ending: |
Remainder of 2020 | $ | 59,000 |
2021 | 118,000 |
2022 | 59,000 |
2023 | 30,000 |
2024 | 30,000 |
Thereafter through 2026 | 38,000 |
Total lease payments | 334,000 |
Less: amounts representing interest | (36,000 | )
Present value of lease liabilities | $ | 298,000 |

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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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