Planet Green Holdings Corp. Leases Disclosure
22. Lease commitment
Effective December 31, 2018, the Company adopted ASU 2016-02, “Leases” (Topic 842), and elected the package of practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. The Company adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component.
The Company had a land, facilities and factory lease agreement with a 5-year lease term starting in April 2018 until April 2023. Upon adoption of ASU 2016-02, the Company recognized lease liabilities of approximately $0 and $0.82 million respectively as of December 31,2022 and 2021, with corresponding Right-of-Use (ROU) assets of the same amount based on the present value of the future minimum rental payments of the new lease, using an effective interest rate of 4.75%, which is determined using an incremental borrowing rate.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.
For the twelve months ended December 31, 2022and 2021, rent expenses amounted to $424,241and $442,297 respectively.
The weighted average remaining lease term of its existing leases is 0.33 years. For operating leases with a lease term of less than one year, the enterprise no longer recognizes lease liabilities and Right-of-Use (ROU) assets, and the lease expense is amortized according to the straight-line method.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2022 | Mar 31, 2023 | Showing above |
| 2021 | Mar 31, 2022 | |
| 2019 | May 14, 2020 | |
| 2016 | Oct 31, 2017 | |
| 2015 | Apr 14, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.