Lease Incentives

Definition: Lease Incentives are payments made by the lessor to or on behalf of the lessee, or reimbursements of lessee costs (e.g., tenant improvement allowan…

Lease Incentives are payments made by the lessor to or on behalf of the lessee, or reimbursements of lessee costs (e.g., tenant improvement allowances, free rent periods, payment to terminate a prior lease). Under ASC 842, lease incentives received reduce the initial measurement of the Right-of-Use Asset (or are netted against lease payments included in the Lease Liability if paid before commencement).