I’d like to ask other professionals for advice.
We have taken a building in lease on which we pay rent for every month. As per the lease we had a rent free period throughout 2017. From 1st January we should start repaying the rent. The accounts are prepared on accruals basis. My question is, from which point we should recognise liability in the balance sheet? I’m certain it should be from the point liability arose so 1st Jan despite the fact the lease was signed last year in 2017 and we benefited from the rent free period. The latter should be shown in P/L and BS to our advantage.
Looking forward to hear your opinions on this query.