What it is
A landlord with free rent or fixed escalations recognizes operating lease income on a straight-line basis over the lease term. Cash rent and income differ every year, and the difference builds a deferred rent receivable that reverses by the end of the term. Auditors recompute it lease by lease.
Enter commencement, term, free rent months, initial monthly rent and the annual escalation for each lease. The Schedule tab shows cash rent and straight-line income for years 1 to 10 and checks that the differences net to zero. The Rollforward tab gives cumulative balances at two dates, the change in the deferred rent receivable and a tie to the ledger.
When to use it
- At each close, for rental income and the straight-line receivable of a rental property portfolio.
- When auditing lease income on a sample of leases.
- When a new lease with free rent or steps is signed and the pattern needs to be set up.
What’s inside
- Leases tab: 30 leases with checks on term, free rent and missing inputs
- Schedule tab: cash rent, straight-line income and the difference by lease year for 10 years
- Rollforward tab: cumulative balances at two dates, income and cash in the period, change in receivable
- Tie of the deferred rent receivable to the ledger
Standard cited
This template follows ASC 842. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
Which payments are straight-lined?
Fixed payments, including free rent periods and fixed escalations. Variable payments such as percentage rent and expense recoveries are recognized as they become due and are left out of this schedule.
How does the schedule treat the commencement month?
It counts as a full month, and periods are measured in whole months from the commencement date. Change the formulas if your policy uses daily proration.
What about leases with irregular rent steps?
The workbook models one initial rent with a fixed annual escalation. For irregular steps, build the lease-year amounts in your own schedule and use the Rollforward logic to compare income with cash.
Related templates
- ASC 842 Lease Schedule (Lessee)
- Audit Program: Real Estate Entity
- Real Estate Owner and Operator Audit Checklist
- Real Estate Impairment Recoverability Test (ASC 360)
Last updated 11/05/2026. All free templates.