In a prior post, we explained how to account for leases when the tenant MUST expand the premises under the terms of the initial lease. In this blog post, we will explain how to account for a lease when the tenant expands a lease, but that expansion was NOT required under the terms of the initial lease. That is, how to account for a lease when the tenant leases a space, decides it needs to expand, and then signs an amendment to the initial lease expanding the leased space. Once again, the difference between this scenario and the prior post we wrote is that in the prior scenario, the tenant was obligated to take the additional space under the initial lease. Under this scenario, the tenant decided to expand the leased premises but it had no obligation to do so.
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