Fit-out contribution
A payment from the lessor towards the cost of fitting out the leased premises — a type of lease incentive.
Definition
A fit-out contribution is a cash amount paid by the lessor to help the lessee configure or refurbish the leased space. It is a form of lease incentive. Under IFRS 16 and amended FRS 102, fit-out contributions received from the lessor reduce the measurement of the right-of-use asset at commencement. If the lessee incurs its own fit-out costs that meet the definition of initial direct costs or leasehold improvements, those may be capitalised separately as property, plant and equipment rather than as part of the lease accounting.
Why it matters
Fit-out contributions are common in new commercial property leases and must be handled carefully. The contribution itself reduces the ROU asset; the lessee's own capital expenditure on fitting out may be a separate fixed asset.
In AuditLease
AuditLease includes a lease incentives received field that captures fit-out contributions, reducing the initial ROU asset in line with IFRS 16 and amended FRS 102 requirements.
Related terms
Put this into practice with AuditLease
AuditLease handles IFRS 16 and FRS 102 lease calculations, statutory note generation, journal entries, and audit evidence — so your team spends less time on spreadsheets and more time on judgements.
This definition is for general information only and is not accounting or legal advice. Definitions are based on IFRS 16, FRS 102, and associated guidance published by the IFRS Foundation and the Financial Reporting Council. Users should refer to the applicable accounting standards and their professional advisers for judgement-specific matters.