Accounting for leases
Summary of Accounting for leasesHow do you account for rent free periods?What is a free rent period?How to account for rent abatements?What is the 90% rule in leasing?Search Results
AI Overview
AI Overview
Rent-free periods are accounted for by
spreading the total cash payments over the entire lease term using the straight-line method, rather than recognizing expense only when cash is paid. A "deferred rent" liability or accrued lease payment asset is recorded to reflect the difference between recognized expense and cash paid.
Key Accounting Principles (ASC 842/IFRS 16)
Total Lease Value: Calculate the total rent payable over the full lease term, including any periods where no cash is exchanged.
Straight-Line Method: Divide the total cost by the total number of periods in the lease to det...