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The new lease standard (ASC 842) allows firms to keep variable leases off-balance-sheet, on the assumption that future expenses cannot be estimated reliably. We show that variable-lease expenses are common and significant; they are as persistent and predictable as operating-lease expenses, and they are not very responsive to changes in revenues. After adopting ASC 842, firms report lower minimum operating lease commitments and higher variable-lease expenses, suggesting that firms substitute operating with variable leases. In addition, neither equity betas nor credit ratings reflect potential variable-lease liabilities. Conservative estimates show that recognition of variable-lease liabilities would increase debt by 8% on average. Overall, our findings challenge the assumptions underlying ASC 842's treatment of variable leases and are important for standard setters and users of financial statements interested in understanding the effects of ASC 842.