USA Free Rent & Deferred Rent Liability


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Started a new building lease in April 2017 and received free rent for 7 months through Oct 2017. Even though the books were on accrual basis accounting, we were not recording straightline rent against Deferred Rent Liability those 7 months. If we had, I would see a $77k Deferred Rent Liability balance on the balance sheet based on the schedule I created. So, my question is, in order to establish that liability balance, should I simply record a JE to debit Retained Earnings and credit Deferred Rent Liability for that $77k at 1/1/18? Then I'll go back and record the payments since Nov 2017 to Deferred Rent Liability?
 

bklynboy

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You could - if its not material I would just offset against current year rent expense so as not to restate
 
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Samir

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Personally, I would record the liability in April of 2017 since that is when it existed, and since you are on an accrual method, record all the entries for rent paid for 2017 (Nov and Dec).
 

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