Do you know how to identify the lease commencement date under ASC 842?

Take this quiz to find out.

First, read this scenario for background:

The tenant entered into an office lease agreement on October 24, 2019. The lease agreement stipulated that commencing on January 1, 2021, the tenant would lease all of the office space on the 3rd, 4th, and 5th floors of a building, which was to be constructed and owned by the landlord. The parcel of land the building would be constructed on was also owned by the landlord.

The tenant would not have the right to obtain the partially constructed shell of the building at any point in time during the construction period.

The agreement stipulated that the landlord will grant the tenant early access to the partially constructed shell on August 1, 2020, however the property will not be fully complete until November 1, 2020.

Based on what you’ve read, what is the lease commencement date?

A) Lease Execution Date – October 24, 2019