A lessee when accounting for a lease incentive received under an operating lease treats it as a(n):
A)increase in rental expense over the lease term.
B)increase in rental income over the lease term.
C)reduction in rental income over the lease term.
D)reduction in rental expense over the lease term.

Question

Quizplus · Accepted Answer

A lease incentive received under an operating lease is treated as a reduction in rental expense over the lease term. This is because the lessor is effectively reducing the cost of the lease for the lessee by providing a financial incentive, which lowers the overall cost of the lease for the lessee. As a result, the lessee can reduce their rental expense over the lease term.

A Lessee When Accounting for a Lease Incentive Received Under