At commencement the lease liability equals the discounted value of the payments still outstanding, discounted at the interest rate implicit in the lease when readily determinable and otherwise at the lessee's incremental borrowing rate. The payments comprise fixed payments, in-substance fixed ones included (payments that are unavoidable in substance, such as those that become fixed once genuine variability resolves, or the lower of alternative payment sets), less incentives receivable; index-linked or rate-linked variable payments, measured at the commencement index or rate (consumer price, benchmark interest or market rent reviews); amounts expected to be paid under residual value guarantees; the strike price of a purchase option whose exercise is reasonably certain; and termination penalties where the lease term reflects termination. Variable payments that depend on usage or performance are excluded and expensed as incurred.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.