Lessee, Term of Contract

FORD MOTOR COMPANY AND SUBSIDIARIESNOTES TO THE FINANCIAL STATEMENTSNOTE 17.  RETIREMENT BENEFITS (Continued)  
The following table summarizes the changes in Level 3 defined benefit pension plan assets measured at fair value on a recurring basis for the years ended December 31 (in millions):

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2020 |
|   |  | Return on plan assets |  |   |  |  |  |   |
|  | FairValueatJanuary 1 |  | Attributableto AssetsHeldatDecember 31 |  | AttributabletoAssetsSold |  | Net Purchases/(Settlements) |  | Transfers Into/ (Out of) Level 3 |  | FairValueatDecember 31 |
| U.S. Plans | $ | 17  |  |  | $ | (2) |  |  | $ | 1  |  |  | $ | —  |  |  | $ | —  |  |  | $ | 16  |  |
| Non-U.S. Plans (a) | 5,572  |  |  | 473  |  |  | 1  |  |  | 1  |  |  | (41) |  |  | 6,006  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |
|  | 2021 |
|   |  | Return on plan assets |  |   |  |  |  |   |
|  | FairValueatJanuary 1 |  | Attributableto AssetsHeldatDecember 31 |  | AttributabletoAssetsSold |  | Net Purchases/(Settlements) |  | Transfers Into/ (Out of) Level 3 |  | FairValueatDecember 31 |
| U.S. Plans | $ | 16  |  |  | $ | (2) |  |  | $ | —  |  |  | $ | 5  |  |  | $ | 1  |  |  | $ | 20  |  |
| Non-U.S. Plans (a) | 6,006  |  |  | (943) |  |  | 153  |  |  | 687  |  |  | 117  |  |  | 6,020  |  |

\_\_\_\_\_\_\_\_\_\_(a)Non-U.S. plans, insurance contracts, primarily Ford-Werke plan, valued at $5 billion and $4.7 billion at year-end 2020 and 2021, respectively.   
NOTE 18. LEASE COMMITMENTS  
We lease land, dealership facilities, offices, distribution centers, warehouses, and equipment under agreements with contractual periods ranging from less than one year to 40 years. Many of our leases contain one or more options to extend. In certain dealership lease agreements, we are the tenant and we sublease the site to a dealer. In the event the sublease is terminated, we have the option to terminate the head lease. We include options that we are reasonably certain to exercise in our evaluation of the lease term after considering all relevant economic and financial factors.  
Leases that are economically similar to the purchase of an asset are classified as finance leases. The leased (“right-of-use”) assets in finance lease arrangements are reported in Net property on our consolidated balance sheets. Otherwise, the leases are classified as operating leases and reported in Other assets in the non-current assets section of our consolidated balance sheets.  
For the majority of our leases, we do not separate the non-lease components (e.g., maintenance and operating services) from the lease components to which they relate. Instead, non-lease components are included in the measurement of the lease liabilities. However, we do separate lease and non-lease components for contracts containing a significant service component (e.g., energy performance contracts). We calculate the initial lease liability as the present value of fixed payments not yet paid and variable payments that are based on a market rate or an index (e.g., CPI), measured at commencement. The majority of our leases are discounted using our incremental borrowing rate because the rate implicit in the lease is not readily determinable. All other variable payments are expensed as incurred.152
