Under ITB, rent deferrals would primarily impact

Under ITB, rent deferrals would primarily impact

• A. the revenue recognized in the current period
• B. the timing of cash collection
• C. the classification of lease liabilities
• D. the depreciation expense recognized

Answer: (B)

Rent deferrals shift when cash flows occur. When rent payments are deferred, the cash inflows or outflows are pushed into future periods, even though the rent is still earned over the lease term. Under accrual accounting, revenue recognition for rent follows when the lease performance occurs, not when cash is received, so the deferral changes cash timing rather than how much revenue is recognized in the current period. Depreciation depends on asset use and depreciation schedules, not on when rent is paid. Lease liability classification is determined by the lease terms and applicable accounting rules, not by the mere fact that payments are postponed. So the primary impact is on the timing of cash collection.

Rent deferrals shift when cash flows occur. When rent payments are deferred, the cash inflows or outflows are pushed into future periods, even though the rent is still earned over the lease term. Under accrual accounting, revenue recognition for rent follows when the lease performance occurs, not when cash is received, so the deferral changes cash timing rather than how much revenue is recognized in the current period. Depreciation depends on asset use and depreciation schedules, not on when rent is paid. Lease liability classification is determined by the lease terms and applicable accounting rules, not by the mere fact that payments are postponed. So the primary impact is on the timing of cash collection.