In the Financial Accounting Standards Board issued ASU - that requires lessees to recognize assets and liabilities on the balance sheet for most leases including operating leases, and followed it up with ASUs - - - and - (collectively “Topic ), which clarified certain aspects of the new leases standard and provided an optional transition method.

 

We adopted Topic on and elected the optional transition method to initially apply the standard at the adoption date. As a result, we applied the new lease standard prospectively to our leases existing or commencing on or after Comparative periods presented were restated upon adoption. Similarly, new disclosures under the standard were made for periods beginning and for prior comparative periods. Prior periods will continue to be reported under guidance in effect prior to In addition, we elected the package of practical expedients permitted under the transition guidance within the standard, which among other things, allowed us to reassess contracts to determine if they contain leases, lease classification and initial direct costs. The standard did impact our statements of operations and had impact on our cash flows.

 

We have an operating lease which is a real estate lease for our headquarters in Fairfax, Virginia. This lease has a fixed lease term of months. We determine if an arrangement is a lease at inception. Operating leases are included in right-of-use operating lease assets, other current liabilities, and operating lease liabilities in our balance sheet as of As of we do have any sales-type or direct financing leases.

 

Our operating lease asset represents our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Since our lease does provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Our lease agreement includes rental payments escalating annually for inflation at a fixed rate. These payments are included in the initial measurement of the operating lease liability and operating lease asset. We do have any rental payments which are based on a change in an index or a rate that can be considered variable lease payments, which would be expensed as incurred.

 

We have lease agreements which contain lease and non-lease components, which are accounted for as a single performance obligation to the extent that the timing and pattern of transfer are similar for the lease and non-lease components and the lease component qualifies as an operating lease. We do recognize lease liabilities and operating lease assets for leases with a term of months or less. We recognize these lease payments on a straight-line basis over the lease term.

 

Upon adoption of Topic on the Company recorded a Right-to-use operating lease asset of and a lease liability of

 

Our lease agreement does contain any material residual value guarantees or material restrictions or covenants.

 

We do sublease any real estate to parties.

 

The following table provides supplemental balance sheet information related to IAI's operating lease:

 

Balance Sheet
Classification		September 30, 2019
Assets:
Right-to-use operating lease asset		$	173,487
Liabilities:
Operating lease liability - current		$	101,744
Operating lease liability - non-current			72,458
Total lease liabilities		$	174,202

 

The following table reconciles the undiscounted cash flows to the operating lease liabilities recorded in our balance sheet.

 

		September 30, 2019
Remainder of 2019		$	27,048
2020			110,086
2021			46,433
Total lease payments			183,567
Less: discount			(9,365	)
Present value of lease liabilities		$	174,202

 

As of our operating lease had a weighted average lease term of approximately years. The discount rate of our lease is equal to our incremental borrowing rate at the measurement date of the lease agreement. The weighted average discount rate of our operating lease is approximately For the months ended we incurred of expense related to our operating leases. Rent expense for the months ended was For the months ended there were short-term leases with a term less than months.