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Nicholas Ruggieri's headshot
Nicholas Ruggieri Assistant Controller

Accounting for a Sublease

Asked on Oct. 28, 2013

We entered into a sub-lease on a property where the FV of the cash flows was going to be less than we earned therefore we booked a loss up front on the sub-lease. Now we are going to terminate the sub-lease contract after a few months. Can we reverse the remaining loss on our books as we do not have the sub-lease anymore?

Answers

Andrew Zezas's headshot
Andrew Zezas Host and CEO • Oct. 29, 2013

This is not truly a real estate question, but an accounting one. Accordingly, as a corporate real estate advisor, I will permit those with appropriate accounting expertise to reply to you. Good luck!

Ken Stumder's headshot
Ken Stumder Finance Director / Controller • Oct. 29, 2013

Nicholas - the answer depends on what your company plans to do with the space. Are you taking possession of the space back, finding a new sub-tenant at no loss, etc.? I went over the guidance on this some time ago for a similar situation. Not a fun read!

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Filed Under: Accounting
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