WHEN VARIABLE LEASE PAYMENTS ARE IN-SUBSTANCE FIXED PAYMENTS. The first exception to not including variable payments is when apparent "variable" payments If future lease payments actually are in-substance fixed payments. We include these "fixed payments in disguise' are uncertain, we consider as part of the lessee's lease payments. For example, assume a retail store's monthly lease them as part of the lease payments will increase next year by the higher of $250 or 0.5% of monthly store revenue. In payments only if they that case, we know that the lease payment will increase by at least $250, so those payments are "in-substance fixed are deemed to be in-substance fixed payments and are included in the lease payments used payments" or if pay ments vary solely when an index in present value calculations. or rate changes. IFThe lease payment can also decrease. The decrease in the Lease payment is reportedas a reduction in lease expense (lessse) and & reduction in Lease revenue (lessor)