On January 1, 2019, the company adopted the amended guidance in ASC 842, Leases, and all related amendments (“new lease standard”) and applied it to all leases using the optional transition method which requires the amended guidance to be applied at the date of adoption. The standard does not require the guidance to be applied to the earliest comparative period presented in the financial statements. As such, comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The new lease standard had a material impact on the company’s consolidated balance sheets, increasing total assets and total liabilities for continuing operations by $60.2 million upon adoption. It did not have an impact on the consolidated statement of operations for the year ended December 31, 2019.

The impact on the consolidated balance sheet as of December 31, 2019 for the adoption of the new lease standard, excluding leases for discontinued operations, was as follows (in thousands):


	Balance at		Adjustments		Balance at
	December 31,		Due to		January 1,
	2018		ASC 842		2019
		(audited)
Assets
Operating lease right-of-use assets	$	-	$	60,557	$	60,557
Other assets		365		(365)		-

Liabilities
Accounts payable		196		(196)		-
Operating lease current liabilities		-		17,650		17,650
Operating lease long-term liabilities		-		45,571		45,571
Other liabilities		3,240		(3,240)		-

The company’s leases do not specify an implicit interest rate. Therefore, the incremental borrowing rate was used based on information available at commencement date to determine the present value of future payments.

Under the new lease standard, companies may elect various practical expedients upon adoption. The company elected the package of practical expedients related to transition, which states that an entity need not reassess initial direct costs for existing leases, the lease classification for any expired or existing leases, and whether any expired or existing contracts are or contain leases.

The company elected to utilize a portfolio approach for lease classification, which allows for an entity to group together leases with similar characteristics provided that its application does not create a material difference when compared to accounting for the leases at a contract level. For railcar leases, the company elected to combine the railcars within each rider and account for each rider as an individual lease.

The company also elected the practical expedient for lessees to include both the lease and non-lease components as a single component and account for them as a lease. Certain of the company’s railcar agreements provide for maintenance costs to be the responsibility of the company as incurred or charged by the lessor. This maintenance cost is a non-lease component that the company elected to combine with the monthly rental payment and account for the total cost as operating lease expense. In addition, the company has a land lease that contains a non-lease component for the handling and unloading services the landlord provides. The company elected to combine the cost of services with the land lease cost and account for the total as operating lease expense.

A lessee may elect not to apply the recognition requirements in the new lease standard for short-term leases. Instead, the lease payments may be recognized into profit or loss on a straight-line basis over the lease term. The company has elected to use this short-term lease exemption, and therefore will not record a lease liability or right-of-use asset for leases with a term of one year or less. The company did not incur any material short-term lease expense for the year ended December 31, 2019.

Lease Expense

The company leases certain facilities, parcels of land, and equipment, with remaining terms ranging from less than one year to 17.9 years. The land and facility leases include renewal options. The renewal options are included in the lease term only for those sites or locations in which they are reasonably certain to be renewed. Equipment renewals are not considered reasonably certain to be exercised as they typically renew with significantly different underlying terms.

The company may sublease certain of its railcars to third parties on a short-term basis. The subleases are classified as operating leases, with the associated sublease income being recognized on a straight-line basis over the lease term.

The components of lease expense are as follows (in thousands):


	Year Ended
	December 31, 2019
Lease expense
Operating lease expense	$	20,806
Variable lease expense ⁽¹⁾		824
Total lease expense	$	21,630

(1)Represents amounts incurred in excess of the minimum payments required for the handling and unloading of railcars for a certain land lease, offset by railcar lease abatements provided by the lessor when railcars are out of service during periods of maintenance or upgrade.

Supplemental cash flow information related to operating leases is as follows (in thousands):


	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	21,459

Right-of-use assets obtained in exchange for lease obligations:
Operating leases		11,176

Right-of-use assets and lease obligations derecognized due to lease modifications:
Operating leases		1,726

Supplemental balance sheet information related to operating leases is as follows:


	December 31, 2019
Weighted average remaining lease term		6.6 years

Weighted average discount rate		5.46%

‎

Aggregate minimum lease payments under the operating lease agreements for future fiscal years as of December 31, 2019 are as follows (in thousands):


Year Ending December 31,	Amount
2020	$	18,867
2021		11,008
2022		8,993
2023		5,832
2024		3,955
Thereafter		17,972
Total		66,627
Less: Present value discount		(11,687)
Lease liabilities	$	54,940

Aggregate minimum lease payments remaining under the operating lease agreements under ASC 840, Leases as of December 31, 2018 are as follows (in thousands):


Year Ending December 31,	Amount
2019	$	22,934
2020		16,855
2021		9,194
2022		6,706
2023		2,976
Thereafter		20,041
Total	$	78,706

As described in Note 4 – Revenue, the majority of the partnership’s segment revenue is generated though their storage and throughput services and rail transportation services agreements with Green Plains Trade and are accounted for as lease revenue. Leasing revenues do not represent revenues recognized from contracts with customers under ASC 606, and are accounted for under ASC 842, Leases. Lease revenue associated with agreements with Green Plains Trade are eliminated upon consolidation. The remaining lease revenue is not material to the company.

As of December 31, 2019, the company had contracted future purchases of grain, corn oil, natural gas, ethanol and distillers grains, valued at approximately $265.9 million.