How does a lessee separate lease and nonlease components? To separate the lease and non-lease components, the lessee allocates the contract consideration To do this, the lessee first determines the price of each component, which is the price at which a lessee would purchase a component of a contract separately. If observable prices are not available, the lessee can When the lessee should maximize the use of observable inputs. In cases where the price is highly variable or uncertain, the lessee may use price. The the total contract consideration and assigns the remaining amount as the estimated component. subtracts the other of determining prices from the price of the remaining