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Due to the impact COVID-19 has had on businesses, there may be adjustments needed to properly account for rent expense due to rent deferrals and concessions. For entities that were granted deferred rental payments, two options are available. First, companies can record the rent expense and liability as if no deferral had been granted. Second, companies can recognize the deferred payments as variable lease payments, in which case the payment would be expensed in the month that it is now due.
If the entity received rent forgiveness, the amount of rent forgiven can be treated as a lease modification and amortized over the remaining period of the lease. Lastly, entities should provide disclosures in their financial statements about material concessions granted or received related to COVID-19.