Lease Accounting

[jhokie7]

If you enter a 10-year lease with a lease incentive to make leasehold improvements of $2m before year 3, then how do you account for this lease incentive as far as timing goes? I assumed you would book the lease incentive on day 1 and begin reducing your rental expense over the life of the lease. Also, what do you record when you take advantage of the incentive and begin making leasehold improvements in year 2?

I have looked at ASC 840 and FTB 88-1. Does anyone know of additional guidance on this matter.