Optional; found on the Additional Data tab
Lease incentives play an important role in lease accounting and are subject to specific guidelines under different accounting standards. This article aims to provide an overview of how lease incentives are treated under ASC 842, GASB 87, and IFRS 16.
Lease incentives are benefits offered by lessors to lessees to encourage them to enter into a lease agreement. These incentives can take various forms, such as upfront cash payments, rent reductions, or allowances for leasehold improvements. It is essential to understand how these incentives are accounted for under each accounting standard.
Enter here landlord incentives for construction or leasehold improvements (payments made to you or on your behalf which should be amortized over the life of the lease). Enter such incentives as a negative number.
ASC 842/IFRS 16/GASB 87
ASC 842, GASB 87, and IFRS 16 provide specific guidelines for handling lease incentives in lease accounting. They require lease incentives to treated as a reduction of the ROU asset.
For an operating lease, you can see the amortization of the lease incentives by running the Operating Leases Verification report, which breaks out the individual components of the accumulated amortization.
For FAS 13 reporting, you may choose whether lease incentives should be reported separately or combined with operating rent. If shown separately, lease incentives are reported on the Income Statement/Balance Sheet Detail report and on the Journal Entries report. They are not reported on the Income Statement/Balance Sheet Compact report.