Glossary/Lease incentive

Lease incentive

In one sentence

A lease incentive is a payment made by the lessor to or on behalf of the lessee, such as a tenant improvement allowance or rent-free period, that reduces the right-of-use asset.

Lease incentives — for example a tenant improvement allowance, a rent-free period, or reimbursement of moving costs — reduce the lease payments and the right-of-use asset. Incentives received at or before commencement reduce the ROU asset directly.

Cite: ASC 842-20-30-5(c)

Related terms

Initial direct costs

Initial direct costs are incremental costs of obtaining a lease that would not have been incurred if the lease had not been obtained — they are added to the right-of-use asset.

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See Lease incentive in a real calculation

Enter a lease and Ledgerage computes it — every figure traced back to the standard.

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