How does Petro Stopping Center identify an asset for lease accounting purposes?

According to Petro Stopping Center's 2025 Franchise Disclosure Document, the company accounts for agreements that convey the right to control the use of an identified asset for a period of time in exchange for consideration as leases. Petro Stopping Center has the right to control the asset if it can obtain substantially all of the economic benefits from, and the right to direct the use of, the identified asset throughout the period of use.

For lease accounting purposes, an asset is considered identified by Petro Stopping Center if it is explicitly or implicitly specified by the agreement. Any substitution rights held by the lessor over the asset are not considered substantive. This means that if the lease agreement clearly points to a specific asset, or if it's reasonably clear which asset is being leased, Petro Stopping Center will treat it as an identified asset for lease accounting. The determination is made at the commencement of the lease.

This definition is important for prospective franchisees as it dictates how lease agreements will be treated on Petro Stopping Center's financial statements. Understanding how assets are identified for lease accounting ensures that franchisees can properly interpret financial information related to leased properties or equipment. It also ensures compliance with accounting standards, which can affect financial reporting and potentially impact decisions related to leasing versus purchasing assets.