USA Straight Line Rent Method - Question on Balance Sheet

[Fasel Khan]

Question for Straight Line Rent Method as Rent Income:

I understand the credit will be Rent Income but what will be the debit be on the Balance Sheet?

Thanks,

 

[bklynboy]

Lets use an example. Say rent is 1000 a month but you get the first month free. Term is 12 months. So SL rent = 11000/12 = 917. JE day 1 is debit rent expense and credit deferred rent liability. when you pay rent of 1000 next month you still debit rent expense 917, credit cash 1000 and debit deferred rent for 83. Over the 123 months you draw down the deferred rent liability to 0. See worksheet.