UK Lease premium

[Barca]

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?

 

[Fidget]

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?

 

[Barca]

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?

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?

 

[Fidget]

No. The premium paid is a sunk cost and should be expensed in full.