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Accounting for a Sublease

Nicholas Ruggieri's Profile
Nicholas Ruggieri
Profile
Title: Assistant Controller
Company: On Deck Capital, Inc.
(Assistant Controller at On Deck Capital, Inc.) | 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?

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Topic Expert
Andrew Zezas
Profile
Title: Host and CEO
Company: CFO Studio and Real Estate Strategies Co..
(Host and CEO, CFO Studio and Real Estate Strategies Corporation) | 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
Profile
Title: Finance Director / Controller
Company: Ken Stumder, CPA
(Finance Director / Controller, Ken Stumder, CPA) | 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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