> ## Documentation Index
> Fetch the complete documentation index at: https://docs.spacebaseapp.com/llms.txt
> Use this file to discover all available pages before exploring further.

# Expenses and lease components

> Understand fixed and variable payments, component allocation, and the amounts included in your accounting lease.

Review both the expense's **adjustment type** and its accounting category when you create a snapshot. The adjustment type describes how the amount changes. Component allocation determines how much consideration belongs to the lease.

## Fixed and variable expenses

| Adjustment type                          | Example                                         | Treatment in Spacebase's lease-payment calculation                                                                           |
| ---------------------------------------- | ----------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------- |
| **Fixed**                                | Contractual rent of \$5,000 each month.         | Eligible for inclusion in lease payments, subject to category and component allocation.                                      |
| **Fixed - Percent**                      | A contractual 3% annual rent increase.          | Eligible for inclusion. A known percentage increase is fixed, even though the dollar amount changes.                         |
| **Variable - Based on an Index or Rate** | Rent linked to a published index.               | Eligible for inclusion using the amounts entered for the snapshot. Review later index changes under the applicable standard. |
| **Variable - Based on Actual Costs**     | A charge that varies with actual service costs. | Excluded from the fixed/index-linked payment pool used to measure the lease liability.                                       |
| **Variable - Based on Sales Volume**     | Percentage rent that depends on sales.          | Excluded from that payment pool. Track the actual amounts for expense and reporting purposes.                                |

In the wizard, review **Expense schedules** and **Individual expenses**, including their categories, dates, amounts, and adjustment types. A regular monthly payment is not necessarily fixed, and an annually changing amount is not necessarily variable.

The amount of an index-linked payment included at commencement and the treatment of later changes depend on the accounting standard. For example, IFRS 16 includes index-linked payments using the index at commencement and requires remeasurement when the contractual cash flows change with the index. See the [IFRS 16 implementation guidance](https://www.gov.uk/hmrc-internal-manuals/business-leasing-manual/blm17035) for initial measurement. Do not substitute a forecast of future index increases for the required measurement basis.

### Example: fixed rent plus sales-based rent

A retail lease requires \$5,000 monthly base rent plus 2% of sales above a breakpoint. Record the base rent as fixed. Track the sales-based amount separately using the sales-volume adjustment type and the [retail sales workflow](/leases/retail-sales). Do not add an estimate of all future percentage rent to the fixed base-rent schedule.

For an actual variable payment of \$800, the expense/payment entry is generally Dr Variable lease expense \$800 and Cr Cash or the relevant payable \$800. Review your exported account mappings and payment workflow. That payment does not itself establish \$800 of new lease liability and ROU asset.

## Lease and nonlease components

A lease component provides the right to use an asset. A nonlease component provides a separate service, such as maintenance. These are separate questions from whether a payment is fixed or variable.

Your asset class's **Nonlease Components** accounting policy controls whether Spacebase separates lease and nonlease components or combines them under the practical expedient. Review the policy before completing the wizard.

When separating components, enter the **Lease component standalone price** and **Nonlease component standalone price**, with notes explaining the basis. Spacebase calculates:

**Lease component percentage = Lease standalone price ÷ (Lease standalone price + Nonlease standalone price) × 100**

It applies that percentage to the consideration being allocated. Use prices on the same time basis and in the same currency. For example, standalone prices of \$9,000 for the lease and \$1,000 for services give a 90% lease allocation. For \$8,000 of allocable consideration, \$7,200 belongs to the lease component and \$800 to the nonlease component.

When the combine policy is selected, the allocation percentage is 100%. This does not convert sales-based or actual-cost variable payments into fixed payments.

The separation and allocation principles are described in [ASC 842's component-allocation guidance](https://dart.deloitte.com/USDART/home/codification/broad-transactions/asc842-10/roadmap-leasing/chapter-4-components-a-contract/4-4-determining-allocating-consideration-in).

## Separate accounting leases for separate assets

Creating one accounting lease per floor or asset is different from separating a service component. Use separate accounting leases when you need independently managed terms, modifications, or terminations. Allocate the relevant areas and payment obligations to each accounting lease and reconcile their total to the contract. See the [floor-by-floor example](/accounting/leases#best-practice-recommendation).

## Check the resulting snapshot

Before approval, compare the payment schedule to the contract, inspect the lease/nonlease allocation, and review the initial ROU asset and lease liability. Confirm that [additional balances and costs](/accounting/balances-and-costs) are not duplicated in expenses. Map the generated accounting categories to your own account numbers using the [chart of accounts](/accounting/chart-of-accounts).