- What is a lease incentive?
- Types of Incentives
- Can I enter incentives after lease commencement in LeaseGuru?
What is a Lease Incentive?
A lease incentive is a payment made from a lessor directly to a lessee, or on behalf of a lessee. This doesn’t include payments from the lessor to the lessee for any good or service that the lessee is providing to the lessor.
Types of incentives include:
- cash
- tenant improvement allowances
- taking over remaining payments on the lessee's existing lease
- paying moving costs
When incentives are mentioned in ASC 842, they are often described as, “paid or payable.” In referring to incentives as “paid or payable” the standard is categorizing these payments into two buckets as follows:
- incentives paid at or before commencement
- incentives payable at commencement, but not paid until after commencement.
Lease incentives not paid or payable at lease commencement constitute a third category of incentives. These incentives are contingent, or only receivable after a future event takes place. This category of incentive is not directly addressed in ASC 842. As such there may be more than one approach to accounting for these contingent incentives.
How This Works in LeaseGuru
How to Add an Incentive at Lease Commencement
If your lease has an incentive at lease commencement, follow these steps to enter that information during lease entry.
1. Log in to LeaseGuru.
2. Select "Add Lease" and fill out your lease information.
3. On the "Base Rent" tab, find the field labeled "Incentives" and enter the incentive amount.
4. Finish adding your lease and click "submit" to see your incentive reflected in journal entries, disclosures and amortization schedules.
FAQ: Can I enter incentives after lease commencement in LeaseGuru?
At this time, LeaseGuru only supports incentives paid at lease commencement.