Leases

12 Months Ended

Sep. 30, 2019

LEASES

Lessee Accounting

Capital leases, primarily for the right to use machinery and equipment, are included with owned plant and equipment within "Plant and Equipment, net" on the consolidated balance sheets in the amount of $23.1 and $21.6 at 30 September 2019 and 2018, respectively. Related amounts of accumulated depreciation are $7.2 and $6.1, respectively.

Operating leases principally relate to real estate and also include aircraft, distribution equipment, and vehicles. Certain leases include escalation clauses, renewal, and/or purchase options. Rent expense is recognized on a straight-line basis over the minimum lease term. Rent expense under operating leases, including month-to-month agreements, was $87.0, $82.7, and $65.8 in fiscal years 2019, 2018, and 2017, respectively.

At 30 September 2019, minimum payments due under leases are as follows:



	Capital Leases		Operating Leases
2020		$1.7		$75.1
2021	2.5		62.6
2022	1.3		44.4
2023	1.1		35.9
2024	1.1		28.6
Thereafter	12.8		171.4
Total		$20.5		$418.0

The present value of the above future capital lease payments totaled $10.1. Refer to Note 16, Debt.

Lessor Accounting

Certain contracts associated with facilities that are built to provide product to a specific customer have been accounted for as leases. In cases where operating lease treatment is appropriate, there is no difference in revenue recognition over the life of the contract as compared to accounting for the contract under a sale of gas agreement. In cases where capital lease treatment is appropriate, the timing of revenue and expense recognition is impacted. Revenue and expense are recognized up front for the sale of equipment component of the contract as compared to revenue recognition over the life of the arrangement under contracts not qualifying as capital leases. Additionally, a portion of the revenue representing interest income from the financing component of the lease receivable is reflected as sales over the life of the contract. As discussed in Note 2, New Accounting Guidance, upon adoption of the new lease guidance we will elect the package of practical expedients permitted under the transition guidance to carry forward these lease determinations as of 30 September 2019.

Operating Leases

Assets subject to operating lease treatment in which we are the lessor are recorded within "Plant and equipment, net" on the consolidated balance sheets. As of 30 September 2019, plant and equipment, at cost, was $2.9 billion, and accumulated depreciation was $.5 billion. Assets subject to operating leases include those of the Lu’An joint venture, which is discussed in Note 7, Acquisitions.

At 30 September 2019, minimum lease payments expected to be collected are as follows:



2020		$321.7
2021	287.3
2022	283.1
2023	278.4
2024	275.5
Thereafter	3,042.5
Total		$4,488.5

Capital Leases

Lease receivables, net, are primarily included within "Noncurrent capital lease receivables" on our consolidated balance sheets, with the remaining balance in "Other receivables and current assets." Allowances for credit losses associated with capital lease receivables are recorded using the specific identification method. As of 30 September 2019 and 2018, the credit quality of capital lease receivables did not require a material allowance for credit losses.

The components of lease receivables were as follows:



30 September	2019			2018
Gross minimum lease payments receivable		$1,453.2			$1,673.7
Unearned interest income	(472.3		)	(568.3		)
Lease Receivables, net		$980.9			$1,105.4

Lease payments collected in fiscal years 2019, 2018, and 2017 were $171.6, $182.7, and $183.6, respectively. These payments reduced the lease receivable balance by $94.6, $97.4, and $92.2 in fiscal years 2019, 2018, and 2017, respectively.

At 30 September 2019, minimum lease payments expected to be collected are as follows:



2020		$162.5
2021	156.9
2022	145.7
2023	139.4
2024	133.2
Thereafter	715.5
Total		$1,453.2