Definition of Rent expense:
Depending on the type of business, rent expense can be a material portion of operating expenses or a negligible one. For retail businesses that do not own their own property, rent expense is one of the main operating expenses along with employee wages and marketing and advertising costs.
The amount to be paid on a lease agreement. This amount is usually based on a per-month basis.
Rent expense is the cost incurred by a business to utilize a property or location for an office, retail space, factory, or storage space. Rent expense is a type of fixed operating cost or an absorption cost for a business, as opposed to a variable expense. Rental expenses are often subject to a one- or two-year contract between the lessor and lessee, with options to renew.
How to use Rent expense in a sentence?
- For a retail business, rent expense can be one of its biggest operating expenses along with employee wages and marketing costs.
- As more people shop online, many retail companies have shifted the money they previously spent on rental expenses to support e-commerce instead.
- A factor that can impact rent expenses includes the need for a location near a major metropolitan area, ports, or transportation lines.
- For manufacturing companies, rental expenses tied to production are part of factory overhead, while administrative office rent is part of operating expenses.
- Rent expense is the cost a business pays to occupy a property for an office, retail space, storage space, or factory.
Meaning of Rent expense & Rent expense Definition