Lease accounting reset – Variable rents
Episode description
We continue our lease accounting miniseries with a focus on variable lease payments, an area that can significantly influence lease classification and measurement. In this episode, we explore the complexities of usage-based and index-based payments, fair market rent adjustments, in-substance fixed payments, and more – providing insights into how these variable rents affect the accounting and disclosures.
In this episode, we discuss:
- 1:12 – Fixed versus variable lease payments and their accounting implications
- 7:13 – Fair market rent adjustments
- 9:37 – In-substance fixed payments, including take-or-pay arrangements
- 15:44 – Usage-based lease payment structures
- 22:18 – Tenant improvement allowances and lease incentives
- 26:10 – Accounting for variable lease payments during lease remeasurement
For more information, see chapter 3 and chapter 5 of our Leases guide. In case you missed it – check out the other episodes in this podcast miniseries:
- Lease accounting reset - Presentation and disclosure
- Lease accounting reset – Modifications and terminations
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About our guests
Marc Jerusalem is a managing director in PwC’s National Office specializing in leasing. Marc consults with clients on complex lease accounting issues and is a frequent contributor to many related PwC National Office publications.
Suzanne Stephani is a director in PwC’s National Office specializing in the statement of cash flows as well as the application and interpretation of the accounting guidance related to financing and leasing transactions.
About our guest host
Guest host Diana Stoltzfus is a partner in the National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the OCA’s Professional Practices Group.
Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to [email protected]
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