Monthly Archives: 8 сар 2021

In conclusion, accounting for rent expense is changing insignificantly from ASC 840 to ASC 842. Now if only the same thing could be said about the accounting for operating leases. When a rent agreement offers a period of free rent, payments are not due to the lessor or landlord. However, you are recording the straight-line rent expense calculated by dividing the total amount of required rent payments by the number of periods in the lease term. Additionally, deferred rent is also recorded for lease agreements with escalating or de-escalating payment schedules. The shift from credit to an asset to a liability still keeps the accounting equation in balance, and this is what we’ll quickly look at next. Cash vs. Accrual Accounting: What’s the Difference? If the lessee’s organization decides to…