How to Account for Month-to-Month Leases
Leases that convert to a monthly lease after an initial term may need to be recorded under ASC 842
Many leases convert to what's called "month-to-month" after an initial term. The lessee should consider the same factors for these leases as they would for other leases. This includes considering contract-based, asset-based, market-based, and entity-based factors to determine the term and payments for which the lessee is reasonably certain to extend the lease.
In Crunchafi Lease Accounting, enter a revision to extend the lease.
NOTE
A lease that is month-to-month is not a short-term lease, which ASC 842 defines as:
A lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise.