Leases

Example $3-$ Identified asset $-$ physically distinct portion of a larger asset

A customer enters into a five$-$year contract with a supplier for the right to transport oil from west Texas to

Houston through a pipeline owned by the supplier. The contract provides that the customer will have the

use of $95\%$ of the pipeline's capacity throughout the contract's term.

Is the capacity portion of the pipeline an identified asset?

Is the capacity portion of the pipeline an identified asset if the customer only had the use of $70\%$ of

the pipeline's capacity instead of $95\%?$

Please provide a codification and a reason for the answer.