Many nonprofit organizations received lease concessions (i.e., lease abatements or deferrals) from landlords as a result of COVID-19. These organizations have two options to account for these concessions in the accounting system -- both options affect the straight-line rent calculation on the organization's deferred rent schedule. A deferred rent schedule can be downloaded here.
The two options are:
- Update the organization's entire straight-line rent calculation and record a catch-up adjustment in the current year; or
- Provided the rent concessions did not materially change the lease in favor of the lessor, adjust the straight-line rent calculation from the point in time that the abatement applies without having to retrospectively adjust and catch-up.
Regardless of the option selected, a footnote disclosure on lease concessions granted due to COVID-19 is required in the financial statements.