We lease real estate, fleet, and equipment for use in our operations. Our leases generally have lease terms of 1 to 30 years, some of which include options to terminate or extend leases for up to 5 to 10 years or on a month-to-month basis. We include options that are reasonably certain to be exercised as part of the determination of lease terms. We may negotiate termination clauses in anticipation of any changes in market conditions, but generally these termination options have not been exercised. Residual value guarantees are generally not included within our operating leases with the exception of some fleet leases. In addition to base rent payments, the leases may require us to pay directly for taxes and other non-lease components, such as insurance, maintenance and other operating expenses, which may be dependent on usage or vary month-to-month. Variable lease payments amounted to $380 million in 2020 and $327 million in 2019. We elected the practical expedient in the new standard to not separate non-lease components from lease components in calculating the amounts of ROU assets and lease liabilities for all underlying asset classes.

We determine if an arrangement is a lease at inception of the contract and we perform the lease classification test as of the lease commencement date. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date

based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we use our estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments.


For operating leases, the ROU assets and liabilities in our consolidated balance sheets follows:
		As of December 31,
(MILLIONS OF DOLLARS)	Balance Sheet Classification	2020		2019
ROU assets	Other noncurrent assets	$	1,393	$	1,289
Lease liabilities (short-term)	Other current liabilities	321		269
Lease liabilities (long-term)	Other noncurrent liabilities	1,114		1,030

Other supplemental information for 2020 follows:

Weighted-Average Remaining Contractual Lease Term (Years)

Weighted-Average Discount Rate

(MILLIONS OF DOLLARS)

As of December 31, 2020

Year Ended

December 31,

2020

Operating leases

6.9

2.9

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

Operating cash flows from operating leases

334

(Gains)/losses on sale and leaseback transactions, net

(3)

ROU assets obtained in exchange for new operating lease liabilities

413

Other supplemental information for 2019 follows: