Get insights into recognizing rent expense on facility leases, including straight-line basis recognition and lease agreement criteria.

According to this policy, a company should recognize a rent expense on a straight-line basis over the term of occupancy for lease agreements entered into, which include free rent, fixed escalation provisions (i.e., scheduled and specified rent increases), or concessions from the lessor in the form of cash payments or assignment of current obligations. It applies worldwide to any facility lease longer than one year if the average monthly rent exceeds the designated amount or the deferred rent liability will, at some point during the lease, exceed the designated amount.