Accounting for lease extensions involves recognizing the economic benefits of a renewal or extension period in a lease contract that is not yet executed and recognized. In a lease extension, there are two distinct obligations: the payment of rent to the lessor, and the promise of continued use of the leased asset to the lessee. When accounting for an extension, businesses must ensure that these obligations are properly recognized and accounted for so as to show accurate financial results. Accounting for lease extensions can be a complex undertaking – but, when done properly, it helps businesses get a better understanding of their bottom line.