Deferred Rent Balance for Migrated, Pre 842, leases
Client is converting leases as of 842 adoption date, 1/1/22, and has deferred rent balance that must be used to adjust ROU asset balance. Essentially, on 1/1/22, we must adjust the ROU asset balance by the deferred rent amount while the lease liability is still calculated as per expectations. What is best practice?
What is the best way to accomplish this? Is it to create a negative payment equal to the deferred rent amount? Should we utilize the 'ROU asset balance' field for migrated leases during conversion?
Accounting as of 1/1/22 adoption date should be as follows (example #s):
ROU asset balance DR 4.7m