The best examples of lease obligations in financial statements

Real-world style examples of lease obligations in financial statements

Before we get into standards and fine print, let’s start with what people actually want to see: clear, concrete examples of lease obligations in financial statements.

Think about a typical large company:

• It leases its headquarters and regional offices.
• It leases warehouses and retail stores.
• It leases vehicles, aircraft, or equipment.
• It leases servers or data centers.

All of those arrangements can create lease obligations that show up as lease liabilities and right‑of‑use (ROU) assets, with a long trail of detail in the notes.

Below are several of the best examples of lease obligations in financial statements, written in the style you’ll actually see in 10‑Ks and annual reports.

Example of lease obligations: retail store portfolio

Picture a national apparel retailer with 800 mall stores. Almost all locations are leased, not owned. Under ASC 842 or IFRS 16, those store leases move on‑balance‑sheet.

A typical disclosure might read something like this (simplified):

Lease liabilities and right‑of‑use assets
The Company leases retail stores, distribution centers, and office space under non‑cancelable operating leases with remaining terms of 1 to 15 years, many of which include options to extend.
As of December 31, 2024, the Company recognized operating lease ROU assets of \(2,450 million and operating lease liabilities of \)2,620 million.

In the notes, you’d usually see a maturity analysis of lease obligations in the financial statements, often in a table but conceptually like this:

• 2025 lease payments: $520 million
• 2026 lease payments: $490 million
• 2027 lease payments: $450 million
• 2028 lease payments: $410 million
• 2029 lease payments: $370 million
• Thereafter: $1,000 million
• Total undiscounted lease payments: $3,240 million
• Less: imputed interest: $(620) million
• Total lease liabilities: $2,620 million

This is one of the clearest examples of lease obligations in financial statements: a long‑term, multi‑location retail footprint, disclosed by year, discounted, and tied back to the balance sheet.

Example of lease obligations: airline fleet and airport gates

Airlines are a classic case study. Many aircraft and airport facilities are leased. Under the newer standards, those are front and center on the balance sheet.

A stylized airline disclosure might say:

The Company leases aircraft, engines, airport gates, and hangars under operating leases with remaining terms of 1 to 18 years. Certain leases contain variable payments based on usage or performance.
As of December 31, 2024, operating lease ROU assets were \(18.3 billion and operating lease liabilities were \)19.1 billion.

In the notes, you’d see:

• Separate categories for aircraft leases vs. real estate leases.
• Variable lease cost disclosed (for example, payments based on flight hours or passenger volumes).
• Short‑term lease cost for leases with terms of 12 months or less.

For analysts, this is one of the best examples of lease obligations in financial statements because it shows how:

• Lease liabilities materially affect leverage ratios.
• Variable lease payments do not all sit in the lease liability; they often flow through expense as incurred.
• The airline’s flexibility (or lack of it) is visible in the length of non‑cancelable terms.

If you want a real‑world reference point, the SEC’s Office of the Chief Accountant has published guidance and staff speeches on lease accounting under ASC 842 that mirror what you see in airline filings:
https://www.sec.gov

Example of lease obligations: tech company data centers and offices

Technology companies might not have fleets of planes, but they do have big lease obligations tied to:

• Corporate headquarters and regional offices.
• Leased data centers and colocation facilities.
• Office equipment and vehicles.

A typical note might read:

The Company’s leases primarily relate to office facilities and data centers. Lease terms generally range from 2 to 12 years and often include options to renew or terminate.
As of June 30, 2025, the Company recognized operating lease ROU assets of \(6.7 billion and operating lease liabilities of \)7.0 billion.

The note would then break down:

• Operating vs. finance leases (for example, a few finance leases for specialized equipment).
• Weighted‑average remaining lease term (for example, 7.3 years).
• Weighted‑average discount rate used to measure lease obligations.

In 2024–2025, many tech firms have been downsizing or subleasing office space after the remote‑work boom. That trend shows up in lease obligations in financial statements as:

• Impairments of ROU assets when space is vacated.
• Sublease income disclosures that offset lease expense.
• Modifications to lease terms and updated lease liabilities.

The FASB and IASB staff Q&As on lease modifications and COVID‑era rent concessions (archived but still relevant) provide useful context:
https://www.fasb.org
https://www.ifrs.org

Example of lease obligations: manufacturing plant and equipment

Manufacturers often sign long‑term leases for:

• Production facilities.
• Warehouses and distribution centers.
• Heavy machinery and specialized equipment.

A manufacturer’s note might say:

The Company leases manufacturing facilities, warehouses, and various items of equipment under operating and finance leases. Lease terms range from 3 to 20 years.
As of December 31, 2024, operating lease liabilities were \(1.2 billion and finance lease liabilities were \)0.4 billion.

The split between operating and finance leases is important:

• Finance leases (formerly “capital leases”) often relate to equipment that the company effectively controls for most of its economic life.
• Operating leases usually relate to facilities or shorter‑term equipment arrangements.

In the income statement, you’ll see:

• For operating leases: a single lease cost (or operating lease expense).
• For finance leases: amortization of ROU assets plus interest on lease liabilities.

This is a clean example of lease obligations in financial statements that shows how classification affects the pattern of expense recognition, even when the total cash paid is similar.

Example of lease obligations: logistics and vehicle fleets

Logistics, parcel delivery, and ride‑sharing businesses often lease:

• Trucks and delivery vans.
• Trailers and containers.
• Regional distribution hubs.

A stylized disclosure:

The Company leases vehicles and facilities under non‑cancelable operating leases expiring at various dates through 2032. Certain vehicle leases include options to purchase at the end of the lease term.
As of December 31, 2024, the Company recognized operating lease liabilities of $3.5 billion.

Here, variable lease payments can be significant. For example, a truck lease might have a fixed base payment plus a variable fee per mile. Under ASC 842 and IFRS 16, those variable amounts are excluded from the initial lease liability and recognized in expense as incurred. The notes will usually disclose total variable lease cost for the period.

For credit analysts, this is one of the more insightful examples of lease obligations in financial statements because the mix of fixed vs. variable payments tells you how sensitive the business is to volume swings.

Example of lease obligations: sale‑leaseback of corporate real estate

Sale‑leaseback transactions are a favorite tool for unlocking cash from owned real estate. A company sells a building, then immediately leases it back from the buyer.

Under current standards, the accounting is more restrictive than it used to be. To recognize a true sale, the arrangement has to meet revenue recognition and control transfer criteria. Otherwise, it might be treated more like a financing.

A note might read:

In 2024, the Company completed a sale‑leaseback transaction of its headquarters building for proceeds of \(400 million, resulting in a gain of \)80 million recognized in Other income. The Company entered into a 15‑year operating lease for the property. As of December 31, 2024, the related ROU asset and lease liability were \(260 million and \)270 million, respectively.

This is a more advanced example of lease obligations in financial statements, but it’s important because:

• The lease liability becomes a long‑term fixed obligation replacing what used to be owned property.
• The gain on sale can look flattering in the income statement, while the new lease obligations quietly increase leverage.

The FASB’s ASC 842 guidance and related implementation Q&As cover sale‑leaseback rules in detail:
https://asc.fasb.org

Example of lease obligations: small business office and equipment

Lease accounting is not just a big‑company story. A mid‑sized professional services firm might:

• Lease office space on a 5‑year non‑cancelable term.
• Lease copiers, servers, and vehicles on 3‑year terms.
• Rent temporary meeting rooms on short‑term contracts.

On the balance sheet, you might see:

• Operating lease ROU assets: $12 million.
• Operating lease liabilities: $13 million.

In the notes, the firm might disclose that:

• Short‑term leases (terms of 12 months or less) are not recognized as ROU assets and liabilities.
• Short‑term lease expense for the year was, for example, $0.5 million, mainly for temporary office space and meeting facilities.

For smaller entities, this is one of the most relatable examples of lease obligations in financial statements because it mirrors what many private companies are dealing with post‑ASC 842 adoption.

How lease obligations flow through the primary financial statements

All of these examples of lease obligations in financial statements share the same basic pattern across the three primary statements.

Balance sheet

You’ll typically see:

• Right‑of‑use assets (operating and/or finance) within property or a separate line.
• Lease liabilities, split between current and noncurrent.

The initial measurement is the present value of lease payments, discounted using the rate implicit in the lease (if readily determinable) or the lessee’s incremental borrowing rate.

Income statement

The impact depends on classification:

• Operating leases: a generally straight‑line lease cost.
• Finance leases: amortization of the ROU asset plus interest expense on the lease liability.

Cash flow statement

You’ll usually see:

• Operating lease cash payments in operating activities.
• Principal portion of finance lease payments in financing activities.
• Interest portion classified based on the company’s accounting policy and applicable standards.

The notes then reconcile these cash flows to the change in lease liabilities, so readers can tie the story together.

2024–2025 trends affecting lease obligations disclosures

The best examples of lease obligations in financial statements are evolving as business models shift. A few current themes:

Remote and hybrid work
Many companies are shrinking office footprints, renegotiating leases, and subleasing excess space. That shows up as:

• ROU asset impairments.
• Lease modifications (revised terms and remeasurement of lease liabilities).
• New disclosures around sublease income.

Rising interest rates
Higher discount rates reduce the present value of new lease obligations, but increase the interest expense component for finance leases. Companies are more sensitive to the optics of long‑term fixed commitments.

ESG and sustainability reporting
Leased assets—especially buildings and fleets—are tied to emissions and energy usage. While ESG reports are separate from GAAP/IFRS financials, investors increasingly read lease obligations in financial statements as a proxy for:

• Physical footprint.
• Long‑term environmental exposure.
• Flexibility to transition to greener assets.

For broader context on how standards evolve, the IFRS Foundation and FASB both publish updates and educational material:
https://www.ifrs.org
https://www.fasb.org

Reading the notes: where the real lease story lives

If you only look at the balance sheet line “Lease liabilities,” you’re missing most of the story. The notes to the financial statements usually include:

• A qualitative description of leasing activities (what is leased, for how long, and with what options).
• A maturity analysis of undiscounted lease payments by year.
• Expense disclosures: operating lease cost, finance lease amortization, interest on lease liabilities, variable lease cost, and short‑term lease cost.
• Supplemental cash flow information, including cash paid for leases and non‑cash ROU asset additions.

When you review examples of lease obligations in financial statements, focus on three questions:

1. How long is the company locked into these leases?
2. How much of the obligation is fixed vs. variable?
3. How aggressive or conservative are the assumptions about renewal options and discount rates?

Those details matter more than the headline number alone.

FAQs about examples of lease obligations in financial statements

Q1. What are some common examples of lease obligations in financial statements?
Common examples include retail store leases, office and headquarters leases, warehouses and distribution centers, aircraft and airport facilities, data centers and server space, vehicle fleets, and leased manufacturing equipment. All of these can create right‑of‑use assets and lease liabilities that appear on the balance sheet, with detailed explanations in the notes.

Q2. Can you give an example of how lease obligations affect financial ratios?
Consider a retailer that adopts ASC 842 and recognizes $3 billion of new lease liabilities. Debt‑to‑equity and leverage ratios immediately increase, even though the underlying business didn’t change overnight. EBITDA may improve slightly (because operating lease expense is partly replaced by interest and amortization), but interest coverage can look weaker. This is why analysts pay close attention to examples of lease obligations in financial statements when adjusting ratios.

Q3. Are short‑term leases always excluded from lease obligations on the balance sheet?
Not always, but companies can elect a short‑term lease exemption for leases with terms of 12 months or less and no purchase option that the lessee is reasonably certain to exercise. Those leases are typically expensed as incurred and do not create recognized lease liabilities. The policy choice and the related expense are usually described in the notes.

Q4. How do variable lease payments show up in the notes?
Variable lease payments that depend on usage, sales, or performance are generally excluded from the initial lease liability and recognized as expense when the event occurs. The notes often disclose the total variable lease cost for the period and explain the nature of those variables—such as percentage‑of‑sales rent for retail locations or per‑mile charges for vehicle fleets.

Q5. Where can I find real examples of public company lease disclosures?
You can browse real examples of lease obligations in financial statements by searching public company annual reports and 10‑Ks on the SEC’s EDGAR system:
https://www.sec.gov/edgar/search.
Look for the “Leases” note in the notes to the financial statements; that’s where the detailed tables and narrative live.

If you’re drafting notes, reviewing them, or building models, the fastest way to sharpen your instincts is to read a variety of these real‑world examples of lease obligations in financial statements, then compare how different industries handle similar issues—especially renewal options, variable payments, and sale‑leasebacks.