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In determining the unit of accounting, a commodity contract should be evaluated to determine whether the contract contains a lease. It should perform the lease assessment prior to the application of any other potentially applicable U.S. GAAP. Lease accounting under ASC 840 would apply if the contract explicitly or implicitly identifies specified property, plant, or equipment.
See UP 2 for further information on determining whether a contract contains a lease.
Question 1-1

Why is lease accounting considered first when determining the accounting model(s) to apply to a commodity contract?
PwC response
The lease assessment is performed before evaluating application of the derivative guidance in accordance withASC 815-10-15-79, which provides a scope exception for leases.

ASC 815-10-15-79

 Leases that are within the scope of Topic 840 are not derivative instruments subject to this Subtopic, although a derivative instrument embedded in a lease may be subject to the requirements of paragraph 815-15-25-1.

There are some contracts that contain a lease under ASC 840 that include a derivative or embedded derivative and would be subjected to derivative accounting if it was considered first. Therefore, the order of application of the guidance may have a significant impact on accounting and disclosure.
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