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Leases
12 Months Ended
Dec. 31, 2021
Leases  
Leases

24) Leases

 

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. The Company determines if a contract is a lease at the inception of the contract. At the commencement date of a lease, the Company measures the lease liability at the present value of the lease payments over the lease term, discounted using the discount rate for the lease. The Company uses the rate implicit in the lease, if available, otherwise the Company uses its incremental borrowing rate. Also, at the commencement date of a lease, the Company measures the cost of the related right-of-use asset which consists of the amount of the initial measurement of the lease liability, any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and any initial direct costs incurred by the Company.

 

Information about the Nature of Leases and Subleases

 

The Company leases office space and equipment from third-parties under various non-cancelable agreements. The Company has operating leases for office space for its segments in areas where it conducts business. The Company subleases some of this office space. The Company also has finance leases for certain equipment, such as copy machines and postage machines. The Company does not have any lease agreements with variable lease payments. The Company has not included any options to extend or terminate leases in the recognition of the right-of-use assets or lease liabilities because of the uncertainty that they will be exercised. No residual value guarantees have been provided to the Company. The Company does not have any restrictions or covenants imposed by leases.

 

Leases that have not Commenced

 

The Company does not have any leases that have not commenced that create significant rights or obligations for the Company.

 

Related Party Lease Transactions

 

The Company does not have any related party lease transactions that require disclosure as of December 31, 2021.

 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

 

24) Leases (Continued)

 

Short-term Leases

 

The Company made an accounting policy election not to apply the recognition requirements of ASC 842 to short-term leases, which are leases that, at the commencement date, have a lease term of 12 months or less and do not include an option to purchase the underlying assets that the lessee is reasonably certain to exercise.

 

Significant Judgments and Assumptions

 

The Company does not use any significant judgments or assumptions regarding the determination of whether a contract contains a lease; the allocation of the consideration in a contract between lease and nonlease components; or the determination of the discount rates for the leases. The following table presents the Company’s total lease cost recognized in earnings, amounts capitalized as right-of- use assets and cash flows from lease transactions.

 

   2021   2020 
   Years Ended December 31 
   2021   2020 
Lease Cost          
Finance lease cost:          
Amortization of right-of-use assets (1)  $41,925   $58,576 
Interest on lease liabilities (2)   4,713    7,341 
Operating lease cost (3)   4,896,315    5,408,737 
Short-term lease cost (3)(4)   167,551    222,311 
Sublease income (3)   (275,038)   (394,758)
Total lease cost  $4,835,466   $5,302,207 
           
Other Information          
Cash paid for amounts included in the measurement of lease liabilities:          
Operating cash flows from operating leases  $4,697,819   $5,293,901 
Operating cash flows from finance leases   4,713    7,341 
Financing cash flows from finance leases   42,184    56,982 
           
Right-of-use assets obtained in exchange for lease liabilities:          
Operating leases  $5,216,048   $5,631,193 
Finance leases   -    8,494 
           
Weighted-average remaining lease term (in years)          
Finance leases   2.07    2.74 
Operating leases   6.04    5.40 
           
Weighted-average discount rate          
Finance leases   5.74%   5.59%
Operating leases   4.14%   4.87%

 

 

(1)Included in Depreciation on property and equipment on the consolidated statements of earnings
(2)Included in Interest expense on the consolidated statements of earnings
(3)Included in Rent and rent related expenses on the consolidated statements of earnings
(4)Includes leases with a term of 12 months or less

 

 

SECURITY NATIONAL FINANCIAL CORPORATION

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Years Ended December 31, 2021 and 2020

 

24) Leases (Continued)

 

The following table presents the maturity analysis of the Company’s lease liabilities.

 

   Finance Leases   Operating Leases 
Lease payments due in:          
2022  $34,458   $4,109,174 
2023   27,220    3,340,343 
2024   4,354    2,707,152 
2025   692    1,809,667 
2026   -    1,414,296 
Thereafter   -    2,449,017 
Total undiscounted lease payments   66,724    15,829,649 
Less: Discount on cash flows   (3,957)   (2,889,958)
Present value of lease liabilities  $62,767   $12,939,691 

 

The following table presents the Company’s right-of-use assets and lease liabilities.

 

      Year Ended December 31 
   Balance Sheet Location  2021   2020 
Operating Leases             
Right-of-use assets  Other assets  $12,483,638   $11,663,245 
              
Lease liabilities  Other liabilities and accrued expenses  $12,939,691   $11,921,884 
              
Finance Leases             
Right-of-use assets     $235,867   $254,276 
Accumulated amortization      (177,660)   (154,144)
Right-of-use assets, net  Property and equipment, net  $58,207   $100,132 
              
Lease liabilities  Bank and other loans payable  $62,767   $104,951 

 

The Company is also a lessor and has operating lease agreements with various tenants that lease its commercial and residential properties. See Note 2 for information about the Company’s real estate held for investment.