Similar to Ford, General Motors (GM) is also reporting lease accounts in both asset and liability sections of its balance sheet on page 52. In Footnote 12. Accrued and Other Liabilities, GM is disclosing that its operating lease liability for FY 2020 is $969 million. Interestingly, GM is treating its finance leases similar to other interest-paying debts (See Footnote 13. Debt). Tesla is also classifying the Finance lease as a part of Debt (see Footnote 12 on page 81). Can you think of any reason justifying this approach treating Operating Lease and Finance Lease differently? In other words, why treating the Finance lease as interest-paying debt is acceptable (As a reference, see Fords 10-K page 148, Footnote 18 where total lease expenses are decomposed. Also, think of the journal entries made to recognize lease expenses under Finance lease vs. Operating Lease).

Forms attached below

GM - Balance Sheet

GM - Note 12

GM - Note 13

Tesla - Note 12

Ford - Note 18

Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) December 31, 2020 December 31, 2019 19,992 s 9,046 8,035 26,209 10,235 7,407 80,924 19,069 4,174 6,797 26,601 10,398 7,953 74,992 31,783 8,406 37,612 5,230 39,819 24,136 7,264 154,270 235,194 S 26,355 8,562 38,750 5,337 42,055 24,640 7,346 153,045 228,037 19,928 $ 21,018 ASSETS Current Assets Cash and cash equivalents Marketable debt securities (Note 4) Accounts and notes receivable (net of allowance of S224 and $201) GM Financial receivables, net (Note 5; Note 11 at VIES) Inventaries (Note 6) Other current assets (Note 4; Note 11 at VIES) Total current assets Non-current Assets GM Financial receivables, net (Note 5: Note 11 at VIES) Equity in net assets of nonconsolidated affiliates (Note B) ) Property, net (Note 9) Goodwill and intangible assets, net (Note 10) Equipment on operating leases, net (Note 7; Note 11 at VIES) Deferred income taxes (Note 17) Other assets (Note 4: Note 11 at VIES) Total non-current assets Total Assets LIABILITIES AND EQUITY Current Liabilities Accounts payable (principally trade) Short-term debt and current portion of long-term debt (Note 13) Automotive GM Financial (Noce 11 at VIES) Accrued liabilities (Note 12) Total current liabilities Non-current Liabilities Long-term debt (Note 13) Automotive GM Financial (Note 11 at VIES) Postretirement benefits other than pensions (Note 15) Pensions (Note 15) Other liabilities (Note 12) Total non-current liabilities Total Liabilities Commitments and contingencies (Note 16) Equity (Note 20) Comenon stock, $0.01 par value Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total Equity Total Liabilities and Equity 1,276 35,637 23,069 79,910 1,897 35,503 26,487 84,905 16,193 56,798 6,277 12,902 13,447 105,607 185,517 12.489 53,435 5,935 12,170 13,146 97,175 182,080 14 26,542 31,962 (13,486) 45,030 4,647 49,677 235,194 S 14 26,074 26,860 (11,156) 41,792 4,165 45,957 228,037 $ Reference should be made to the notes to consolidated financial statements. 52 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Nonconsolidated VIES Automotive Nonconsolidated VIEs principally include automotive related operating entities to which we provided financial support to ensure that our supply needs for production are met or are not disrupted. Our variable interests in these nonconsolidated VIEs include equity investments, accounts and loans receivable, committed financial support and other off-balance sheet arrangements. The carrying amounts of assets and liabilities related to our nonconsolidated VIES were insignificant at December 31, 2020 and 2019. Our maximum exposure to loss as a result of our involvement with these VIEs was $1.2 billion, inclusive of $776 million in committed capital contributions to Ultium Cells LLC at December 31, 2020, and an insignificant amount at December 31, 2019. We currently lack the power through voting or similar rights to direct the activities of these entities that most significantly affect their economic performance. Note 12. Accrued and Other Liabilities December 31, 2020 December 31, 2019 7,300 $ 3,132 3,048 1,864 7,725 23,069 $ 10,402 3,234 2,987 1,969 7,895 26,487 S Accrued liabilities Dealer and customer allowances, claims and discounts Deferred revenue Product Warranty and related liabilities Payrolls and employee benefits excluding postemployment benefits Other Total accrued liabilities Other liabilities Deferred revenue Product warranty and related liabilities Operating lease liabilities Employee benefits excluding postemployment benefits Postemployment benefits including facility idling reserves Other Total other liabilities S 2,715 $ 5,193 969 822 739 3,009 13,447 $ 2,962 4,811 1,010 704 633 3,026 13,146 S Years Ended December 31, 2015 2020 2018 $ Product Warranty and Related Liabilities Warranty balance at beginning of period Warranties issued and assumed in period -recall campaigns Warranties issued and assumed in period - product warranty Payments Adjustments to pre-existing warranties Effect of foreign currency and other Warranty balance at end of period 7.798 S 1,628 1,773 (2,986) 41 (12) 8,242 S 7,590 $ 745 2,001 (3,012) 455 19 7.798 $ 8,332 665 2,143 (2,903) (464) (183) 7,590 S In the three months ended December 31, 2020, we recorded an accrual of $1.1 billion, which represents our current estimate of the expected costs of complying with the recall related to the Takata passenger-side inflators in certain GMT900 vehicles, which are full-size pickup trucks and SUVs. This accrual is reflected in Warranties issued and assumed in period recall campaigns in the table above. Refer to Note 16 for additional information on Takata matters. 72 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ( Note 13. Debt Automotive The following table presents debt in our automotive operations: December 31, 2020 Carrying Amount Fair Value Secured debt 303 $ 332 Unsecured debt 16,929 20,988 Finance lease liabilities 237 256 Total automotive debt(a) $ 17,469 $ 21,576 Fair value utilizing Level 1 inputs S 19,826 Fair value utilizing Level 2 inputs $ 1,750 Available under credit facility agreements(b) $ 18,222 Weighted-average interest rate on outstanding short-term debt(c) 3.8 % Weighted average interest rate on outstanding long-term debt(c) 5.6 % December 31, 2019 Carrying Amount Fair Value 167 $ 165 13,909 15,247 310 516 $ 14,386 S 15.928 S 13,628 S 2,300 $ 17,285 4.9 % 5.4 % (a) Includes net discount and debt issuance costs of $540 million at December 31, 2020 and 2019. (6) Excludes our 364-day, 52.0 billion facility designated for exclusive use by GM Financial. @) Includes coupon rates on debt denominated in various foreign currencies and interest free loans. Unsecured debt primarily consists of revolving credit facilities and senior notes. In March 2020, we borrowed: (1) $3.4 billion against our three-year, $4.0 billion facility; (2) $2.0 billion against our three-year, $3.0 billion facility, which reduced to $2.0 billion in May 2020 (three-year, $2.0 billion transformation facility); and (3) $10.5 billion against our five-year, $10.5 billion facility with maturity dates ranging from 2021 to 2023. We repaid all amounts drawn under the revolving credit facilities as of December 31, 2020. We did not have any borrowings against our revolving credit facilities at December 31, 2019. In April 2020, we renewed our 364-day, S2.0 billion facility dedicated for exclusive use by GM Financial for an additional 364-day term and extended $3.6 billion of the three-year, $4.0 billion facility for an additional year expiring in April 2022. The remaining portion will expire in April 2021, unless extended. As part of the extension of the three-year, $4.0 billion facility, we agreed not to execute any share repurchases while we have any outstanding borrowings under the revolving credit facilities, except for the three-year, $2.0 billion transformation facility. In addition, we are restricted from paying dividends on our common shares if outstanding borrowings under the revolving credit facilities exceed $5.0 billion, with the exception of the three-year, $2.0 billion transformation facility. In May 2020, we issued $4.0 billion in aggregate principal amount of senior unsecured notes with a weighted average interest rate of 6.11% and maturity dates ranging from 2023 to 2027. The notes are governed by a sixth supplemental indenture and the same base indenture that govems our existing notes, which contains terms and covenants customary to these types of securities, including a limitation on the amount of certain secured debt we may incur. The net proceeds from the issuance of these senior unsecured notes provide additional financial flexibility and will be used for general corporate purposes. In May 2020, we entered into a new unsecured 364-day, $2.0 billion revolving credit facility as an additional source of available liquidity. In August 2020, we repaid $500 million of our floating rate senior unsecured debt upon maturity. 73 Note 11 - Customer Deposits Customer deposits primarily consisted of cash payments from customers at the time they place an order or reservation for a vehicle or an energy product and any additional payments up to the point of delivery or the completion of installation, including the fair values of any customer trade-in vehicles that are applicable toward a new vehicle purchase. Customer deposits also include prepayments on contracts that can be cancelled without significant penalties, such as vehicle maintenance plans, Customer deposit amounts and timing vary depending on the vehicle model, the energy product and the country of delivery. In the case of a vehicle, customer deposits are fully refundable. In the case of an energy generation or storage product, customer deposits are fully refundable prior to the entry into a purchase agreement or in certain cases for a limited time thereafter (in accordance with applicable laws). Customer deposits are included in current liabilities until refunded or until they are applied towards the customer's purchase balance. Note 12 - Debt The following is a summary of our debt and finance leases as of December 31, 2020 (in millions): Net Carrying Valve Current Long-Terms Unpaid Principal Balance Unused Committed Amount (1) $ 419 115 171 366 856 1,705 1,995 19 4.951 422 503 1.282 1,800 1,805 55 5.957 Contractual Interest Rates 1.25% 2375% 2.00% 5.30% 3.3% 3.6% 5.8% Contractual Maturity Date March 2021 March 2022 May 2014 August 2025 July 2023 January 2021 January 2031 2TR 1 709 278 39 Recourse debt 2021 Notes 2022 Notes 2024 Notes 2025 Notes Credit Anment Solar Boods and other Loans Totalmente debt Non-recourse debt: Automotive backed Notes Solar Asset backed Notes China Loan Agreements Cash Equity Debt Solar Loan backed Notes Warehouse Agreements Solar Term Loan Automotive Lease-backed Credit Facilities Solar Revolving Credit Facility and other Loans Total non-course debt Total debt Finance less Total debt and financeses 1,372 921 1,076 616 408 133 257 18 13 37 151 1.205 1,141 616 439 152 294 131 33 0.6%-79% 3.0%-7,7% 4.0% 5.356-58% 4.8%-7.5% 1.79-1.8% 3.79 % August 2021 August 2014 September 2024 February 2013 June 2021-December 2024 July 2033-January 2005 September 2018 September 2019 September 2022 January 2021 September 2022 November 2012 806 19 153 2.7%-5.1% June 2022-February 2033 81 3,511 8.162 1,094 4,612 10.569 23 2.354 2.632 1,049 1.758 374 2.132 $ $ 9.556 81 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 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): 2019 Return on plan assets Attributable Fair to Assets Attributable Fair Value Held to Net Transfers Value at at Assets Purchases/ Intol (Out of) at January 1 December 31 Sold (Settlements) Level 3 December 31 U.S. Plans $ 1 $ 1 $ 15 $ S 17 Non-U.S. Plans (a) 5.249 215 (5) 113 5,572 2020 Return on plan assets Attributable Fair to Assets Attributable Value Held to Net at at Assets Purchases/ January 1 December 31 Sold (Settlements) 17 $ (2) $ 1 $ 5,572 473 1 Transfers Intol (Out of) Level 3 Fair Value at December 31 16 6,006 U.S. Plans Non-U.S. Plans (a) (a) Primarily Ford-Werke plan assets (insurance contract valued at $4.5 billion and $5 billion at year-end 2019 and 2020, 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. 146 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) December 31, 2020 December 31, 2019 19,992 s 9,046 8,035 26,209 10,235 7,407 80,924 19,069 4,174 6,797 26,601 10,398 7,953 74,992 31,783 8,406 37,612 5,230 39,819 24,136 7,264 154,270 235,194 S 26,355 8,562 38,750 5,337 42,055 24,640 7,346 153,045 228,037 19,928 $ 21,018 ASSETS Current Assets Cash and cash equivalents Marketable debt securities (Note 4) Accounts and notes receivable (net of allowance of S224 and $201) GM Financial receivables, net (Note 5; Note 11 at VIES) Inventaries (Note 6) Other current assets (Note 4; Note 11 at VIES) Total current assets Non-current Assets GM Financial receivables, net (Note 5: Note 11 at VIES) Equity in net assets of nonconsolidated affiliates (Note B) ) Property, net (Note 9) Goodwill and intangible assets, net (Note 10) Equipment on operating leases, net (Note 7; Note 11 at VIES) Deferred income taxes (Note 17) Other assets (Note 4: Note 11 at VIES) Total non-current assets Total Assets LIABILITIES AND EQUITY Current Liabilities Accounts payable (principally trade) Short-term debt and current portion of long-term debt (Note 13) Automotive GM Financial (Noce 11 at VIES) Accrued liabilities (Note 12) Total current liabilities Non-current Liabilities Long-term debt (Note 13) Automotive GM Financial (Note 11 at VIES) Postretirement benefits other than pensions (Note 15) Pensions (Note 15) Other liabilities (Note 12) Total non-current liabilities Total Liabilities Commitments and contingencies (Note 16) Equity (Note 20) Comenon stock, $0.01 par value Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total stockholders' equity Noncontrolling interests Total Equity Total Liabilities and Equity 1,276 35,637 23,069 79,910 1,897 35,503 26,487 84,905 16,193 56,798 6,277 12,902 13,447 105,607 185,517 12.489 53,435 5,935 12,170 13,146 97,175 182,080 14 26,542 31,962 (13,486) 45,030 4,647 49,677 235,194 S 14 26,074 26,860 (11,156) 41,792 4,165 45,957 228,037 $ Reference should be made to the notes to consolidated financial statements. 52 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Nonconsolidated VIES Automotive Nonconsolidated VIEs principally include automotive related operating entities to which we provided financial support to ensure that our supply needs for production are met or are not disrupted. Our variable interests in these nonconsolidated VIEs include equity investments, accounts and loans receivable, committed financial support and other off-balance sheet arrangements. The carrying amounts of assets and liabilities related to our nonconsolidated VIES were insignificant at December 31, 2020 and 2019. Our maximum exposure to loss as a result of our involvement with these VIEs was $1.2 billion, inclusive of $776 million in committed capital contributions to Ultium Cells LLC at December 31, 2020, and an insignificant amount at December 31, 2019. We currently lack the power through voting or similar rights to direct the activities of these entities that most significantly affect their economic performance. Note 12. Accrued and Other Liabilities December 31, 2020 December 31, 2019 7,300 $ 3,132 3,048 1,864 7,725 23,069 $ 10,402 3,234 2,987 1,969 7,895 26,487 S Accrued liabilities Dealer and customer allowances, claims and discounts Deferred revenue Product Warranty and related liabilities Payrolls and employee benefits excluding postemployment benefits Other Total accrued liabilities Other liabilities Deferred revenue Product warranty and related liabilities Operating lease liabilities Employee benefits excluding postemployment benefits Postemployment benefits including facility idling reserves Other Total other liabilities S 2,715 $ 5,193 969 822 739 3,009 13,447 $ 2,962 4,811 1,010 704 633 3,026 13,146 S Years Ended December 31, 2015 2020 2018 $ Product Warranty and Related Liabilities Warranty balance at beginning of period Warranties issued and assumed in period -recall campaigns Warranties issued and assumed in period - product warranty Payments Adjustments to pre-existing warranties Effect of foreign currency and other Warranty balance at end of period 7.798 S 1,628 1,773 (2,986) 41 (12) 8,242 S 7,590 $ 745 2,001 (3,012) 455 19 7.798 $ 8,332 665 2,143 (2,903) (464) (183) 7,590 S In the three months ended December 31, 2020, we recorded an accrual of $1.1 billion, which represents our current estimate of the expected costs of complying with the recall related to the Takata passenger-side inflators in certain GMT900 vehicles, which are full-size pickup trucks and SUVs. This accrual is reflected in Warranties issued and assumed in period recall campaigns in the table above. Refer to Note 16 for additional information on Takata matters. 72 Table of Contents GENERAL MOTORS COMPANY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) ( Note 13. Debt Automotive The following table presents debt in our automotive operations: December 31, 2020 Carrying Amount Fair Value Secured debt 303 $ 332 Unsecured debt 16,929 20,988 Finance lease liabilities 237 256 Total automotive debt(a) $ 17,469 $ 21,576 Fair value utilizing Level 1 inputs S 19,826 Fair value utilizing Level 2 inputs $ 1,750 Available under credit facility agreements(b) $ 18,222 Weighted-average interest rate on outstanding short-term debt(c) 3.8 % Weighted average interest rate on outstanding long-term debt(c) 5.6 % December 31, 2019 Carrying Amount Fair Value 167 $ 165 13,909 15,247 310 516 $ 14,386 S 15.928 S 13,628 S 2,300 $ 17,285 4.9 % 5.4 % (a) Includes net discount and debt issuance costs of $540 million at December 31, 2020 and 2019. (6) Excludes our 364-day, 52.0 billion facility designated for exclusive use by GM Financial. @) Includes coupon rates on debt denominated in various foreign currencies and interest free loans. Unsecured debt primarily consists of revolving credit facilities and senior notes. In March 2020, we borrowed: (1) $3.4 billion against our three-year, $4.0 billion facility; (2) $2.0 billion against our three-year, $3.0 billion facility, which reduced to $2.0 billion in May 2020 (three-year, $2.0 billion transformation facility); and (3) $10.5 billion against our five-year, $10.5 billion facility with maturity dates ranging from 2021 to 2023. We repaid all amounts drawn under the revolving credit facilities as of December 31, 2020. We did not have any borrowings against our revolving credit facilities at December 31, 2019. In April 2020, we renewed our 364-day, S2.0 billion facility dedicated for exclusive use by GM Financial for an additional 364-day term and extended $3.6 billion of the three-year, $4.0 billion facility for an additional year expiring in April 2022. The remaining portion will expire in April 2021, unless extended. As part of the extension of the three-year, $4.0 billion facility, we agreed not to execute any share repurchases while we have any outstanding borrowings under the revolving credit facilities, except for the three-year, $2.0 billion transformation facility. In addition, we are restricted from paying dividends on our common shares if outstanding borrowings under the revolving credit facilities exceed $5.0 billion, with the exception of the three-year, $2.0 billion transformation facility. In May 2020, we issued $4.0 billion in aggregate principal amount of senior unsecured notes with a weighted average interest rate of 6.11% and maturity dates ranging from 2023 to 2027. The notes are governed by a sixth supplemental indenture and the same base indenture that govems our existing notes, which contains terms and covenants customary to these types of securities, including a limitation on the amount of certain secured debt we may incur. The net proceeds from the issuance of these senior unsecured notes provide additional financial flexibility and will be used for general corporate purposes. In May 2020, we entered into a new unsecured 364-day, $2.0 billion revolving credit facility as an additional source of available liquidity. In August 2020, we repaid $500 million of our floating rate senior unsecured debt upon maturity. 73 Note 11 - Customer Deposits Customer deposits primarily consisted of cash payments from customers at the time they place an order or reservation for a vehicle or an energy product and any additional payments up to the point of delivery or the completion of installation, including the fair values of any customer trade-in vehicles that are applicable toward a new vehicle purchase. Customer deposits also include prepayments on contracts that can be cancelled without significant penalties, such as vehicle maintenance plans, Customer deposit amounts and timing vary depending on the vehicle model, the energy product and the country of delivery. In the case of a vehicle, customer deposits are fully refundable. In the case of an energy generation or storage product, customer deposits are fully refundable prior to the entry into a purchase agreement or in certain cases for a limited time thereafter (in accordance with applicable laws). Customer deposits are included in current liabilities until refunded or until they are applied towards the customer's purchase balance. Note 12 - Debt The following is a summary of our debt and finance leases as of December 31, 2020 (in millions): Net Carrying Valve Current Long-Terms Unpaid Principal Balance Unused Committed Amount (1) $ 419 115 171 366 856 1,705 1,995 19 4.951 422 503 1.282 1,800 1,805 55 5.957 Contractual Interest Rates 1.25% 2375% 2.00% 5.30% 3.3% 3.6% 5.8% Contractual Maturity Date March 2021 March 2022 May 2014 August 2025 July 2023 January 2021 January 2031 2TR 1 709 278 39 Recourse debt 2021 Notes 2022 Notes 2024 Notes 2025 Notes Credit Anment Solar Boods and other Loans Totalmente debt Non-recourse debt: Automotive backed Notes Solar Asset backed Notes China Loan Agreements Cash Equity Debt Solar Loan backed Notes Warehouse Agreements Solar Term Loan Automotive Lease-backed Credit Facilities Solar Revolving Credit Facility and other Loans Total non-course debt Total debt Finance less Total debt and financeses 1,372 921 1,076 616 408 133 257 18 13 37 151 1.205 1,141 616 439 152 294 131 33 0.6%-79% 3.0%-7,7% 4.0% 5.356-58% 4.8%-7.5% 1.79-1.8% 3.79 % August 2021 August 2014 September 2024 February 2013 June 2021-December 2024 July 2033-January 2005 September 2018 September 2019 September 2022 January 2021 September 2022 November 2012 806 19 153 2.7%-5.1% June 2022-February 2033 81 3,511 8.162 1,094 4,612 10.569 23 2.354 2.632 1,049 1.758 374 2.132 $ $ 9.556 81 FORD MOTOR COMPANY AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS NOTE 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): 2019 Return on plan assets Attributable Fair to Assets Attributable Fair Value Held to Net Transfers Value at at Assets Purchases/ Intol (Out of) at January 1 December 31 Sold (Settlements) Level 3 December 31 U.S. Plans $ 1 $ 1 $ 15 $ S 17 Non-U.S. Plans (a) 5.249 215 (5) 113 5,572 2020 Return on plan assets Attributable Fair to Assets Attributable Value Held to Net at at Assets Purchases/ January 1 December 31 Sold (Settlements) 17 $ (2) $ 1 $ 5,572 473 1 Transfers Intol (Out of) Level 3 Fair Value at December 31 16 6,006 U.S. Plans Non-U.S. Plans (a) (a) Primarily Ford-Werke plan assets (insurance contract valued at $4.5 billion and $5 billion at year-end 2019 and 2020, 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. 146