Rent Expense on Facilities Leases Policy

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Screenshot of the first page of Rent Expense on Facilities Leases Policy

This policy outlines a set of procedures for recognizing rent expense on facility leases.

According to this policy, a company should recognize rent expense on a straight-line basis over the term of occupancy for lease agreements entered into, which include any of the following: free rent, fixed escalation provisions (i.e., scheduled and specified rent increases) or concessions from the lessor in the form of cash payments or assignment of current obligations. It applies worldwide to any facility lease longer than one year if the average monthly rent exceeds the designated amount or the deferred rent liability will, at some point during the lease, exceed the designated amount.

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