Business has a few rental agreements in place which are subject to incentives, these being rent free periods. On looking at the contracts, there is a rent review period which will allow for an initial increase in rental value, either based on open market or inflation rates, and then again each year following to the end of the lease. It is highly likely that the business will continue with the lease following the rent review and so would be subject to any increase. When working out what the average lease cost should be, does the possible increase in rent need to be considered, or would these just be taken though the P&L as and when they occur?
Thanks in advance.