Operating Lease, Weighted Average Remaining Lease Term



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| [Table of Contents](#i4a1c883199354127b0e9b0ddb9e84eb8_7) |  | Notes to Consolidated Financial Statements — (continued)(In thousands of U.S. dollars, except share and per share amounts or as otherwise disclosed) |  |
| ACCENTURE 2022 FORM 10-K |  | F-22 |
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8. LeasesAs a lessee, substantially all of our lease obligation is for office real estate. Our significant judgments used in determining our lease obligation include whether a contract is or contains a lease and the determination of the discount rate used to calculate the lease liability. We elected the practical expedient not to separate lease and associated non-lease components, accounting for them as a single combined lease component, for our office real estate and automobile leases. Our leases may include the option to extend or terminate before the end of the contractual term and are often non-cancelable or cancelable only by the payment of penalties. Our lease assets and liabilities include these options in the lease term when it is reasonably certain that they will be exercised. In certain cases, we sublease excess office real estate to third-party tenants.Lease assets and liabilities recognized at the lease commencement date are determined predominantly as the present value of the payments due over the lease term. Since we cannot determine the implicit rate in our leases, we use our incremental borrowing rate on that date to calculate the present value. Our incremental borrowing rate approximates the rate at which we could borrow, on a secured basis for a similar term, an amount equal to our lease payments in a similar economic environment.When we are the lessee, all leases are recognized as lease liabilities and associated lease assets on the Consolidated Balance Sheet. Lease liabilities represent our obligation to make payments arising from the lease. Lease assets represent our right to use an underlying asset for the lease term and may also include advance payments, initial direct costs, or lease incentives. Payments that depend upon an index or rate, such as the Consumer Price Index (CPI), are included in the recognition of lease assets and liabilities at the commencement-date rate. Other variable payments, such as common area maintenance, property and other taxes, utilities and insurance that are based on the lessor’s cost, are recognized in the Consolidated Income Statement in the period incurred.As of August 31, 2022 and 2021, we had no material finance leases. Operating lease expense is recorded on a straight-line basis over the lease term. Lease costs are as follows:

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|  | Fiscal |
|   | 2022 | 2021 |
| Operating lease cost | $ | 769,806  |  | $ | 765,232  |  |
| Variable lease cost | 187,087  |  | 176,426  |  |
| Sublease income | (16,804) |  | (23,717) |  |
| Total | $ | 940,089  |  | $ | 917,941  |  |

Supplemental information related to operating lease transactions is as follows:

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|  | Fiscal |
|  | 2022 | 2021 |
| Lease liability payments | $ | 730,815  |  | $ | 753,167  |  |
| Lease assets obtained in exchange for liabilities | 690,767  |  | 599,866  |  |

As of August 31, 2022 and 2021, our operating leases had a weighted average remaining lease term of 7.3 years and a weighted average discount rate of 3.7% and 3.9%, respectively.   
  

