Do you know when a lease starts?

start date

Lease Start date vs Move in Date vs Possession Date vs Commencement Date vs Execution Date. Which one is correct?

Every lease has a “start” date, but most people do not understand what that date really is. When does a lease start? Does a lease start on the execution date or on the commencement date? What about the possession date? Or the date the company opens for business at that location? Lease Start date vs Move in Date vs Possession Date vs Commencement Date vs Execution Date.  Which one is correct?

Ladies and gentlemen, for accounting purposes, a lease “starts” on the date possession is passed from the landlord to the tenant. On that date, the lessee or tenant should start recording straight-line expense, even if that date is earlier than the “commencement date” specified on the lease. Let me stress this again as it is a very important point. The “commencement date” specified on the lease document has ABSOLUTELY no bearing whatsoever on the lease start date under current (and the new) lease accounting rules.

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About LeaseQuery:  LeaseQuery is lease management software that helps companies manage their leases.  Rather than relying on excel spreadsheets, our clients use LeaseQuery to get alerts for critical dates (renewals, etc), calculate the straight-line amortization of rent and TI allowances per GAAP, provide the required monthly journal entries (for both capital and operating leases) and provide the commitment disclosure reports required in the notes and the MD&A.  Contact us here.