How to account for Lease Incentives received in Occupier?

When your lease commences, you may not know exactly when or for how much the lease incentive will be received. Therefore, you may need to amend your lease within lease administration to mimic the receipt of the incentive. You company should perform this if there is a material discrepancy in the timing or/and amount of the incentive payment.

If incentives amounts entered in during the initial measurement match the amount and period of receipt of incentive payment, you will not need to amend the lease as the amortization schedule and journal entries reflect this payment. 

Here are common approaches to Amend a lease due to changes in the timing or amount of receipt of lease incentives. To Amend a lease within Lease Administration, refer to this article. 

Lease Incentive Receipt Date Changes: 

If you received the incentive earlier than expected, you can "Amend" the lease within Lease Admin with an "Execution Date" in the period received and update the "Estimated Date" to the date the incentive was received. 

If you received the incentive later than expected, you can "Amend" the lease with an "Execution Date" no later than the original date the incentive was supposed to be received. Then update the "Estimated Date" to the updated expected receipt date. 

For example, if the incentive was supposed to be received on 12/31/24 but you did not receive it until March of 2025, the "Execution Date" needs to be earlier than 12/31/2024. If you were to amend the lease after this date, the lease incentive would already be accounted for within the amortization schedules and journal entries. Therefore, the amendment execution date needs to be before this date. 

Different Incentive Amount Received than Estimated: 

When selecting the "Execution Date" for when you receive a different incentive amount that original estimated, you will need to select an "Execution Date" before the original "Estimated Date." 

Update the "Estimated Amount Received" with the new lease incentive amount. 

Original Measurement did NOT originally have a Lease Incentive:

When selecting the "Execution Date" for when you receive a lease incentive not originally captured, you will need to select an "Execution Date" for the date of receipt of the incentive, or the date the incentive is deemed reasonably collectable, whatever is earlier. 

Add the incentive amount into the "Estimated Amount Received."