[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.205-36]

[Page 607]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents
 
          Subpart 31.2--Contracts With Commercial Organizations
 
Sec. 31.205-36  Rental costs.

    (a) This subsection is applicable to the cost of renting or leasing 
real or personal property acquired under ``operating leases'' as defined 
in Statement of Financial Accounting Standards No. 13 (FAS-13), 
Accounting for Leases. Compliance with 31.205-11(m) requires that assets 
acquired by means of capital leases, as defined in FAS-13, shall be 
treated as purchased assets; i.e., be capitalized and the capitalized 
value of such assets be distributed over their useful lives as 
depreciation charges, or over the lease term as amortization charges, as 
appropriate (but see subparagraph (b)(4) below).
    (b) The following costs are allowable:
    (1) Rental costs under operating leases, to the extent that the 
rates are reasonable at the time of the lease decision, after 
consideration of (i) rental costs of comparable property, if any; (ii) 
market conditions in the area; (iii) the type, life expectancy, 
condition, and value of the property leased; (iv) alternatives 
available; and (v) other provisions of the agreement.
    (2) Rental costs under a sale and leaseback arrangement only up to 
the amount the contractor would be allowed if the contractor retained 
title.
    (3) Charges in the nature of rent for property between any 
divisions, subsidiaries, or organization under common control, to the 
extent that they do not exceed the normal costs of ownership, such as 
depreciation, taxes, insurance, facilities capital cost of money, and 
maintenance (excluding interest or other unallowable costs pursuant to 
part 31), provided that no part of such costs shall duplicate any other 
allowed cost. Rental cost of personal property leased from any division, 
subsidiary, or affiliate of the contractor under common control, that 
has an established practice of leasing the same or similar property to 
unaffiliated lessees shall be allowed in accordance with subparagraph 
(b)(1) above.
    (4) Rental costs under leases entered into before March 1, 1970 for 
the remaining term of the lease (excluding options not exercised before 
March 1, 1970) to the extent they would have been allowable under 
Defense Acquisition Regulation (Formerly ASPR) 15-205.34 or Federal 
Procurement Regulations section 1-15.205-34 in effect January 1, 1969.
    (c) The allowability of rental costs under unexpired leases in 
connection with terminations is treated in 31.205-42(e).

[48 FR 42301, Sept. 19, 1983, as amended at 51 FR 2665, Jan. 17, 1986; 
61 FR 69288, Dec. 31, 1996]