LOUISIANA-PACIFIC CORP

9. LEASES

Our lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, rail cars to transport our products, and a fleet of vehicles. We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property, plant, or equipment for a period of time in exchange for consideration.

As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The lease term for all our leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

As of December 31, 2023, our weighted average discount rate was 3%, and our weighted average remaining lease term wasseven years for operating leases.

Our operating leases are included in our Consolidated Balance Sheets and Consolidated Statements of Income as follows (dollars in millions):

For the years ended December 31, 2023 and 2022, we incurred operating lease expenses of$10 million and $10 million, respectively, included within costs of sales and selling, general and administrative expenses. We made cash payments of$10 million and $9 million during the years ended December 31, 2023 and 2022, respectively, related to our operating leases. We further incurred operating lease expense of$4 million and$6 million related to short-term rent expense for the years ended December 31, 2023 and 2022, respectively.

We obtained right of use (ROU) assets in exchange for new operating lease liabilities of$4 million and $4 million for the years ended December 31, 2023 and 2022, respectively. We did not enter into any financing leases during 2023 or 2022.

In connection with the Entekra shutdown described in "Note 7 - Business Exit Charges,” we terminated the related lease arrangements and derecognized the associated operating lease assets and liabilities, resulting in a non-cash pre-tax impairment charge of $3 million.

The following table sets forth the minimum lease payments that are expected to be made in each of the years indicated (dollars in millions):