The guidance (formerly FAS13) requires that rent expense be recorded evenly over the term of the underlying lease. This straight-line rent expense may differ substantially from the contractual rent payments. Differences may be the result of build-out period for which no rent is charged, escalating rent payments, a rent holiday, or combination of all three factors. Our Lease Management Tool assumes payments are made when contractually due, and then determines the rent expense in accordance with Generally Accepted Accounting Principles ("GAAP").

The difference between these two amounts represents deferred rent. Generally, rent payments go up over time which results in a liability during the early part of a lease term when contractual payments are less than the straight-line rent.

Lease Management Tool Inputs

Our Lease Management Tool is an Excel add-in which allows you to compute cash (contractual) rent, GAAP (straight-line) rent and deferred rent as of any date you specifiy.*

The following inputs are collected and stored for use in managing the Lease data:

Figure 1. Primary screen for all leases; this is the first tab in the workbook and the Create/Modify and Delete Buttons allow you to create, modify existing, or delete saved leases respectively.

The main screen for the Lease Management Tool. To input a new lease, go to an empty row and click on the 'Create' button. To modify an existing lease, click on the 'Modify' button for a row with existing Lease data. If a lease is no longer needed (such as if it has expired) click on delete to remove it. This system allows for up to 15 leases to be analyzed within the same workbook and to compute the deferred rent for the input "As Of" date.

When a 'Create' button is clicked (in an empty row available to create a new lease), a window appears to collect the pertinent information for this lease. Some information, such as the Lease Id and Location inputs, are there to allow you to describe and/or correlate the lease to any existing Lease system you may already have in place to track leases. Other inputs, such as the Lease Name, Turnover date, First Payment Date, Base Rent amount and Expiration date, are mandatory. These inputs have bold labels and the input screen will not allow a lease to be created without this information entered with valid data. (See Figure 2)

Figure 2. Input screen to create each lease to be managed under the Tool.

All of our input screens have '?' buttons to provide a help screen to desribe each input and the expected value. Some inputs have limited values (the months are a list of values as 'Jan', 'Feb', 'Mar', etc.) while others are limited to numbers (year inputs and the rent amounts). Any inputs that are not correct (such as out of order rent dates or early expiration), are flagged as an error before the lease can be created.

On the Input Sheet (Figure 1), a button exists to set the "As Of" date for the current computation date. Click on the 'Update/Change Date' button to change the date that the analysis will be performed "As Of" or the effective date to determine the number days since the start of the lease. An input screen will appear asking you to enter a date to use for the "As Of" date. (See Figure 3)

Figure 3. Input screen for the "As Of" date.

If you need to modify a lease after it has been created, click on the 'Modify' button and you will see the form with the information previously entered populating the relevant fields on a form identical to the Create form (Figure 2). To modify any information for the selected lease, simply change the value in the form and click the 'Modify Lease' button. Any errors will be identified and you can correct them before proceeding. (See Figure 4)

Figure 4. Input screen to modify an already created lease to be managed under the Tool.

* Dates prior to 1992 not supported

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