What is Accrued Rent Liability?

Accrued rent liability is a balance sheet account that stores the amount of rent incurred but not yet paid. This account is used by a tenant that has entered into a facility rental arrangement with a landlord.

Accounting for Accrued Rent Liability

A renter records an accrued rent liability when it has incurred a rent expense, but has not yet paid for it. To record this liability, the renter credits the accrued rent liability account and debits the rent expense account. When the renter eventually pays the landlord, the payment is recorded as a debit to the accrued rent liability account and a credit to the cash account.

Classification of Accrued Rent Liability

The liability is usually included in the accrued liabilities account, along with all other accruals. However, if the accrued rent amount is large enough, management might want to record it in a separate account. The latter situation arises when the rent expense comprises a substantial proportion of the total expenses incurred by the renter.