Definition of "Leasehold"

Hulen Buckner real estate agent
Hulen Buckner, Real Estate Agent Fathom Realty

Agreement between the lessee and lessor specifying the lessee's rights to use the leased property for a given time at a specified rental payment. As rental payments are made, rent expense is charged. When the rental is paid in advance, a Prepaid Rent account (Prepaid Expense) is recorded that has to be allocated into expense over the rental period. If the prepayment is for a long-term lease, however, it is recorded as a Deferred Charge and then amortized. The amortization entry for a long-term lease is to charge rent expense and credit leasehold.

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