In many leases, a lessor may provide a lessee with one or more lease incentives. Often, those incentives are paid or payable at the commencement date of the lease. However, certain other leases contain incentives contingent upon future events or actions to be taken by the lessee. Because Topic 842, Leases, of the Financial Accounting Standards Board Accounting Standards Codification does not provide guidance on accounting for contingent lease incentives, questions have arisen as to how to account for them. A new Accounting Brief, Lessee accounting for tenant improvements, addresses the accounting for these arrangements.
