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In this tutorial, Priya Singleton, a quality control officer at Blue and Company, explains the classification of costs in lease contracts. Costs typically fall into three categories: 1. **Lease Component**: Payments for the right to use the leased asset, such as rent for a space.2. **Non-Lease Component**: Payments for additional services provided by the landlord, like common area maintenance (CAM), which includes services such as landscaping and cleaning.3. **Non-Component Costs**: Expenses not tied to the lease, such as reimbursed property taxes that represent the lessor's costs.Understanding these components helps in accurately recording assets and liabilities associated with non-lease components.
