Question: What Is Included In Rent Expense?

Under accounting guidelines, rent expense belongs to the “selling, general and administrative accounts” category.

Other SG&A items include charges as diverse as litigation, office supplies, money a business pays to settle regulatory liabilities, salaries, insurance and depreciation.

What are rent expenses?

Rent expense is an account that lists the cost of occupying rental property during a reporting period. Under the cash basis of accounting, the amount of rent expense reported in a period is the amount of cash paid during that period.

How is rent expense calculated?

Divide the total amount of prepaid rent by the applicable number of months. For example, a company that prepaid $12,000 for the year must divide $12,000 by 12 months. This calculation indicates the amount of rent the company must pay on a monthly basis. In this scenario, the company must pay $1,000 per month for rent.

Is equipment rental an expense?

Equipment rental expense. Equipment rental expense is an account in which is stored the year-to-date expense associated with renting various types of equipment.

Is Rent a direct expense?

Examples of direct costs include manufacturing supplies and commissions. Rent expense may only be a direct cost if only one cost object relates to the facility being rented.