Lease accounting and analysis simplified.

COVID-19, 
A Tale of Two Rent Concessions

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COVID-19 related rent concessions take many forms, the way your clients have to account for those different forms will vary --- often significantly. Before you finalize another rent concession / lease restructure, make sure you and your client understand the way it will affect their financial results. 

These six rent concession scenarios have different accounting treatments under the FASB’s and IASB’s lease accounting standards:

Pure rent abatement / forgiveness.

Rent deferral, with the rent to be repaid later with no other change to the lease.

Withholding of rent. Not a deferral, but an unilateral decision to preserve cash.

Rent abatement or deferral, but with a contraction in leased premises or assets.

Rent abatement or deferral, but with a lease modification to early terminate the lease.

Rent abatement or deferral, but with an extension of the term and/or expansion of premises / assets under lease.

There are different options for dealing with each of these real world scenarios, all of which have different accounting impacts. Do you know which option is better for your client’s P&L right now? Which option helps improve their balance sheet metrics?  EBTIDA?

LeaseCalcs’ guide to dealing with COVID-19 related lease concessions and adjustments will help you and your client make the right decision.