Lease premium

UK Discussion in 'General Accountancy Discussion' started by Barca, Feb 11, 2018.

  1. Barca

    Barca

    Joined:
    Nov 23, 2017
    Messages:
    36
    Likes Received:
    0
    If a new tenant of a lease pays the old tenant of that lease a premium, how and where will the premium feature on the accounts of the new tenant?
     
    Barca, Feb 11, 2018
    #1
    1. Advertisements

  2. Barca

    Fidget VIP Member

    Joined:
    Jan 6, 2013
    Messages:
    487
    Likes Received:
    70
    Location:
    UK
    Assuming the old tenant isn't sub-letting to the new tenant then it would be a separate expense from lease payments in the accounts of the new tenant since their lease agreement is with the lessor rather than the old tenant. So the premium would be recorded as a separate expense.

    Just out of interest, why is the new tenant paying a premium to the old tenant?
     
    Fidget, Feb 14, 2018
    #2
    1. Advertisements

  3. Barca

    Barca

    Joined:
    Nov 23, 2017
    Messages:
    36
    Likes Received:
    0
    Hi

    Does that mean that the premium paid by the new tenant can be recorded as an expense on the new tenants accounts, divided up over the five year period of the lease?
     
    Barca, Feb 14, 2018
    #3
  4. Barca

    Fidget VIP Member

    Joined:
    Jan 6, 2013
    Messages:
    487
    Likes Received:
    70
    Location:
    UK
    No. The premium paid is a sunk cost and should be expensed in full.
     
    Fidget, Feb 14, 2018
    #4
    1. Advertisements

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.