Ashland determines if an arrangement is or contains a lease at contract inception and determine its classification as an operating or finance lease at lease commencement. Ashland leases certain office buildings, transportation equipment, warehouses and storage facilities, and equipment. All of Ashland’s leases are operating leases. Real estate leases represent approximately 87% of the total lease liability. Operating lease assets and obligations are reflected within operating lease assets, net; current operating lease obligations; and non-current operating lease obligations captions on the Condensed Consolidated Balance Sheets.

Lease expense for these leases is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the period those payments are incurred. The components of lease cost recognized within our Statements of Consolidated Comprehensive Income (Loss) were as follows:

(In millions)	Location	Three months ended March 31, 2020		Six months ended March 31, 2020
Lease cost:
Operating lease cost	Selling, General & Administrative	$	3	$	8
Operating lease cost	Cost of Sales		3		6
Variable lease cost	Selling, General & Administrative		2		2
Variable lease cost	Cost of Sales		2		4
Short-term leases	Cost of Sales		2		3
Total lease cost		$	12	$	23

The following table summarizes Ashland’s lease assets and liabilities as presented in the March 31, 2020 Condensed Consolidated Balance Sheet:

(In millions)	March 31, 2020
Assets
Operating lease assets, net	$	144
Total lease assets		144

Liabilities
Current operating lease obligations	$	23
Non-current operating lease obligations		131
Total lease liabilities	$	154

Ashland often has options to renew lease terms for buildings and other assets. The exercise of lease renewal options are generally at Ashland’s sole discretion. In addition, certain lease arrangements may be terminated prior to their original expiration date at Ashland’s discretion. Ashland evaluates renewal and termination options at the lease commencement date to determine if it is reasonably certain to exercise the option on the basis of economic factors. The weighted average remaining lease term for operating leases as of March 31, 2020 was 15 years.

Residual value guarantees are not common within Ashland’s lease agreements nor are restrictions or covenants imposed by leases. Ashland has elected the practical expedient to combine lease and non-lease components. The discount rate implicit within the leases is generally not determinable. Therefore, Ashland determines the discount rate based on its incremental borrowing rate. The incremental borrowing rate is determined using a buildup method resulting in an estimated range of secured borrowing rates matching the lease term and the currency of the jurisdiction in which lease payments are made, adjusted for impacts of collateral. Consideration was given to Ashland’s own relevant debt issuances as well as debt instruments of comparable companies with similar credit characteristics. The weighted average discount rate used to measure operating lease liabilities as of March 31, 2020 was 3.2%. There are no leases that have not yet commenced but that create significant rights and obligations for Ashland.

Right-of-use assets exchanged for new operating lease obligations were $1 million and $2 million for the three and six months ended March 31, 2020.

Cash paid for amounts included in the measurement of operating lease liabilities:

(In millions)	As of March 31, 2020
Remainder of 2020	$	13
2021		26
2022		34
2023		16
2024		13
Thereafter	$	100
Total lease payments		202
Less amount of lease payment representing interest		(48	)
Total present value of lease payments	$	154

As of September 30, 2019, under the previous guidance, the future minimum rental payments are as follows:

(In millions)	As of September 30, 2019
2020	$	29
2021		27
2022		34
2023		15
2024		13
Thereafter		110
Total lease payments	$	228