Identified Asset
Category
General Concepts
An identified asset is a specific asset that is explicitly or implicitly specified in a contract. Under ASC 842 and IFRS 16, a lease exists only if there is an identified asset. An asset is typically identified by being explicitly specified in the contract, but can also be implicitly specified if the supplier has no practical ability to substitute it.
Why it matters
The identified asset test is the first gate in determining whether a contract contains a lease. If the supplier can substitute the asset with another one and benefits economically from doing so, there is no identified asset. and therefore no lease. This distinction is critical for data center contracts, managed fleet arrangements, and co-location agreements where the specific equipment may or may not matter to the customer's use.
How Arvexi handles this
Arvexi's AI evaluates contract language against the identified asset criteria during document extraction. The platform flags substitution rights, analyzes whether they are substantive, and determines whether the arrangement contains an identified asset. documenting the analysis for audit review.