Leases Leases (Notes)

9 Months Ended

Sep. 30, 2020

Leases of Lessor Disclosure [Text Block]

Leases

During the first quarter of 2020, reimbursements for projects at certain MPLX refining logistics locations were agreed to between MPLX and MPC. These reimbursements relate to the storage services agreements between MPLX and MPC at these locations and required the embedded leases within these agreements to be reassessed under the leasing standard. As a result of the reassessment, one of our leases was reclassified from an operating lease to a sales-type lease. As a result, the underlying assets previously shown on the Consolidated Balance Sheets associated with the sales-type lease were derecognized and the net investment in the lease (i.e., the sum of the present value of the future lease payments and the unguaranteed residual value of the assets) was recorded as a lease receivable. See Note 5 for the location of lease receivables and unguaranteed residual assets on the Consolidated Balance Sheets. The difference between the net book value of the underlying assets and the net investment in the lease has been recorded as a Contribution from MPC in the Consolidated Statements of Equity given that the transaction related to refining logistics was a common control transaction. During the first quarter of 2020, MPLX derecognized approximately $171 million of property, plant and equipment, recorded a lease receivable of approximately $370 million, recorded an unguaranteed residual asset of approximately $10 million and a Contribution from MPC of $209 million.

Lease revenues included on the Consolidated Statements of Income were as follows:



	Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue⁽¹⁾	$	208	$	70	$	248	$	63

Sales-type leases:
Profit/(loss) recognized at the commencement date	—		—		—		N/A
Interest income (Sales-type lease revenue- fixed minimum)	37		—		3		N/A
Interest income (Revenue from variable lease payments)	$	1	$	—	$	1	N/A



	Nine Months Ended September 30, 2020				Nine Months Ended September 30, 2019
(In millions)	Related Party		Third Party		Related Party		Third Party
Operating leases:
Operating lease revenue⁽¹⁾	$	589	$	199	$	773	$	196

Sales-type leases:
Profit/(loss) recognized at the commencement date	—		—		—		N/A
Interest income (Sales-type lease revenue- fixed minimum)	113		—		3		N/A
Interest income (Revenue from variable lease payments)	$	1	$	—	$	1	N/A


(1)	These amounts are presented net of executory costs.

See Note 5 for additional information on where related party lease assets are recorded in the Consolidated Balance Sheets. Third party lease assets are less than $1 million as of September 30, 2020 and are included within the “Receivables, net” and “Other noncurrent assets” captions within the Consolidated Balance Sheets.

The following is a schedule of future payments on the sales-type leases as of September 30, 2020:



(In millions)	Related Party
2020	$	39
2021	157
2022	157
2023	158
2024	158
2025 and thereafter	473
Total minimum future rentals	1,142
Less: present value discount	723
Lease receivable	$	419