USA What entries to make?


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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?
 
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kirby

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Typically if an agreement is short term then you call it a rental agreement. If long term it is a lease, and then you follow all the ASC 842 rules. Meanwhile, yes, the non profit payments are lease or rental expense and the for profit division has rental or lease income.
 
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