USA Deferred Rent

[KAREN BOTTOMS]

What account do you post indirect cost for a lease that will be amortized? Deferred rent or rent expense?

 

[Drmdcpa]

Huh?

If you post to an expense account it is not deferred.

But not really sure of your situation. Deferred rent? Do not understand that term. Prepaid rent perhaps?

 

[Steve-LevelUp]

let's presume that you received 1 month free in January, and then had $1,000 per month payments from Feb - Dec, for a total of $11,000. this equates to $916.67 per month in rent expense. So, given you did not pay a rent expense, you need to accrue $916.67 for January rent (Dr Rent expense, Cr, Accrued Liability) every month that passes, you would reverse $83.33 until the end of the year.

If the free rent was at the end of the year rather than at the beginning, then you would use an asset account (pre-paid) rather than an accrual.

I hope that helps.