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AULDIN 17 <br /> & ENKINS <br /> Comments, Recommendations, ORANGE COUNTY <br /> and Other Issues (Continued) NORTH CAROLINA <br /> ■ New GASB Pronouncements for Future Years (Continued) <br /> Statement No. 87, Leases (Continued) <br /> Lease Term: The lease term is defined as the period during which a lessee has a non-cancelable right to use an underlying asset, plus the <br /> following periods, if applicable: <br /> Periods covered by a lessee's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessee will exercise <br /> that option; <br /> Periods covered by a lessee's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessee will not <br /> exercise that option; <br /> Periods covered by a lessor's option to extend the lease if it is reasonably certain, based on all relevant factors, that the lessor will exercise that <br /> option; <br /> Periods covered by a lessor's option to terminate the lease if it is reasonably certain, based on all relevant factors, that the lessor will not <br /> exercise that option. <br /> A fiscal funding or cancellation clause should affect the lease term only when it is reasonably certain that the clause will be exercised. Lessees <br /> and lessors should reassess the lease term only if one or more of the following occur: <br /> The lessee or lessor elects to exercise an option even though it was previously determined that it was reasonably certain that the lessee or <br /> lessor would not exercise that option; <br /> The lessee or lessor elects not to exercise an option even though it was previously determined that it was reasonably certain that the lessee or <br /> lessor would exercise that option; and/or <br /> An event specified in the lease contract that requires an extension or termination of the lease takes place. <br /> 13 <br />