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Accounting for Lease Concessions Due to COVID-19

27 Aug 2020 2:27 PM | Anonymous

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:

  1. Update the organization's entire straight-line rent calculation and record a catch-up adjustment in the current year; or
  2. 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. 

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