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by Dubois_73 on February 18th, 2009

Dubois_73

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Should I record my companies annual office rental expense as a liability? It is a pretty significant obligation on a 4 year lease on the office ($170k).

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  • by CPA_4_u on July 6th, 2009

    CPA_4_u

    Under accrual accounting, it's technically not a liability until you have actually occupied the space and in cash basis, you only have to record it when it's paid...so the short answer is no. Under accrual accounting, even though your company may have signed a lease to remain in the property for 4 years, circumstances may arise that will decrease the length of time that the property is actually leased (i.e., you may experience rapid growth and need to move to a larger space) So the company may not actually be liable for the entire amount (although in that case, there would probably be a separate fee for breaking the lease).

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