I work for a non-profit that also has a for profit division that has a recently new office building. The non-profit has an agreement with the office building that at the end of the agreement if a certain amount of the office space is not rented the non-profit will make a payment to the office building based on the amount of unleased space at a specified per square amount which was based on the expected square footage rent cost of the building.
I am thinking the payments the non-profit is making to the office building would be considered rental expense and the office building would record them as rental income. Does that sound correct?
I am thinking the payments the non-profit is making to the office building would be considered rental expense and the office building would record them as rental income. Does that sound correct?