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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 it would for other leases. Such factors include 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.�