Percentage Lease

Percentage lease is an accounting concept that is associated with a leased space at which a company or any entity is doing its business. We all know whenever a business acquires premises for doing business activities on lease it has to pay a rent for that lease. The rent paid by the business entity is known as the base rent for that leased premises. A percentage lease is a type of lease where the business entity has to pay the base rent and in addition to that base rent it has to pay a certain percentage of the revenue earned by the business entity by doing business at the leased space.

Percentage lease is a term that is widely used in commercial real estate business. In certain cases the base rent is reduced by the lesser as he is continuously being provided with the percentage of potential revenue a business is earnings from that place.  The revenue percentage that is paid by the business used the leased space can be the percentage of the monthly or the gross annual profit of the business. This profit percentage or sales percentage is coupled with the base rent of the space to accumulate in the form of the percentage lease. An example of the percentage leased can be the retail stores and shops that are operating in the leased space.

Other Related Accounting Articles:

• Operating Lease
• Accounting for Capital Lease
• Operating Earnings Explained
• Annual Percentage Rate
• Importance of Overhead Ratio
• Debt to Income Ratio
• Negative Retained Earnings
• Positive and Negative Operating Leverage Definition
• Business Model
• Net Worth