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Anonymous General Manager, Financial Reporting and Analysis

Accounting For Lease Contract Termination

Asked on March 15, 2016

If we give notice to cancel an office lease, I believe the contraction fee liability shall be recognized when written notice is given. Would leasehold improvements on our books be written off at the time of the termination notice or when the space is actually vacated? Thanks.

Answers

Wayne Spivak President & CFO • March 14, 2016

I would write-off when I knew the liability with the lease was officially over (when you gave the keys back).

Jeff McGlaughlin Corporate Controller • March 16, 2016

Anonymous, you are correct. FASB 146, paragraph 15, requires you to recognize the Lease Termination Liability when you give written notice (assuming that's what the contract requires for an early termination).

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