8. LEASES AND COMMITMENTS

The Company determines if an arrangement is a lease or contains a lease at inception. The Company leases certain office equipment under finance leases. We also lease equipment related to our horse racing operations under operating leases. For lease accounting purposes, we do not separate lease and nonlease components, nor do we record operating or finance lease assets and liabilities for short term leases.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of lease payments. We recognize expense for operating leases on a straight-line basis over the lease term. The Company’s lease agreements do not contain any variable lease payments, material residual value guarantees or any restrictive covenants.

Lease costs related to operating leases were $33,519 for the year ended December 31, 2019. The total lease expenses for leases with a term of twelve months or less for which the Company elected not to recognize a lease asset or liability was $558,233 for the year ended December 31, 2019.

Lease costs included in depreciation and amortization related to our finance leases were $23,795 for the year ended December 31, 2019. Interest expense related to our finance leases was immaterial.

The following table shows the classification of the right of use assets on our consolidated balance sheets:


	Balance Sheet Location	December 31, 2019
Assets
Finance	Land, buildings and equipment, net (1)	96,284
Operating	Operating lease right-of-use assets	74,832
Total Leased Assets		$ 171,116

1 – Finance lease assets are net of accumulated amortization of $23,795 for the year ended December 31, 2019.

The following table shows the lease terms and discount rates related to our leases:


	December 31, 2019
Weighted average remaining lease term (in years):
Finance	3.7
Operating	1.3
Weighted average discount rate (%):
Finance	5.0%
Operating	5.4%

The maturity of operating leases and finance leases for the year ended December 31, 2019 are as follows:


Year Ended December 31, 2019	Operating leases		Finance leases
2020		31,349		28,743
2021		23,100		28,743
2022		23,100		28,743
2023		—		19,331
Total minimum lease obligations		77,549		105,560
Less: amounts representing interest		(2,717)		(9,276)
Present value of minimum lease payments		74,832		96,284
Less: current portion		(29,776)		(24,500)
Lease obligations, net of current portion	$	45,056	$	71,784

Purchase Obligations

In March 2014, the Company entered into a seven-year agreement with a new totalizator provider. Pursuant to the agreement, the vendor provides totalizator equipment and related software which records and processes all wagers and calculates odds and payoffs. The amounts charged to operations for totalizator expenses for the years ended December 31, 2019 and 2018 were $233,000 and $230,000, respectively.

Future minimum purchase obligations are as follows:


	Payment due by period
	Total Amount
Obligations	Committed		2020
Purchases		235,000	$	235,000