When should a CAM true-up be accrued at year-end?

When the lease year ended in the period being closed and the actual reconciliation amount is reasonably estimable based on prior history. If the lease year is calendar 2025, the books for 2025 are still open at March 1, 2026, and prior reconciliations have run consistently 5 to 7 percent above estimate, the year-end accrual is appropriate. If the prior history is too volatile to estimate or the lease is too new, an after-the-fact prior-period adjustment is acceptable.

What is the journal entry for a year-end CAM accrual?

Debit operating expense (occupancy) for the estimated true-up amount, credit accrued occupancy liability. When the actual reconciliation arrives, debit the accrued liability, debit or credit operating expense for the variance between estimate and actual, and credit accounts payable for the actual amount due. If a refund is expected, reverse the polarities accordingly.

Does GAAP require a CAM accrual?

GAAP requires expense recognition in the period the obligation is incurred when the amount is reasonably estimable. A CAM true-up obligation is incurred during the lease year, so the matching principle calls for accrual. In practice, materiality drives whether non-public companies accrue. Public companies and private companies with ASC 842 lease accounting routinely accrue.

How does ASC 842 affect CAM reconciliation accounting?

ASC 842 governs lease accounting and requires variable lease payments, including CAM true-ups, to be recognized in the period the obligation is incurred. The right-of-use asset and lease liability calculations exclude variable payments not tied to an index or rate, but the variable payment itself flows through current-period operating expense in the period it relates to. The standard reinforces the period-matching treatment.

What happens if the books are closed when the reconciliation arrives?

The bill flows through current period as a prior-period adjustment to occupancy expense. Materiality drives whether disclosure is needed. For most small and mid-sized businesses, an immaterial CAM variance posted to current period is the practical answer. For larger amounts or audited financial statements, the question of whether to reopen the prior period is a judgment call between the firm and the client.

Period Treatment for Annual CAM Reconciliations

A CAM reconciliation lands in the AP queue in March. CAM means common area maintenance, the shared costs a tenant pays. The bill date is March 14, 2026. The period covered is January 1, 2025 through December 31, 2025. The amount is $7,800. The accountant has a choice to make. The invoice date is the wrong input.

A CAM true-up is one of the few GL entries that fools you. A true-up is the yearly catch-up bill or credit. The invoice date is the trap. The right answer comes from reading what the bill covers. The wrong period puts a full year of cost in the wrong year. That throws off every year-over-year report the client reads. The right treatment is simple once you set the rule.

Period treatment: The choice of which period an expense or credit belongs in. It is driven by when the cost was incurred, not when the invoice or payment posted. For a CAM reconciliation, the lease year covered sets the period, not the invoice date.

The rule in three lines

The expense belongs in the period covered. Not the period the invoice arrived. Not the period the payment cleared. It belongs in the lease year the bill covers.

Are the books for that period open? Then post the entry as of the close date. Use an accrued liability. Or book it as a direct expense. Do that if you did not accrue an estimate before.

Are the books for that period closed? Then run the entry through the current period. Treat it as an adjustment to operating expense. Note the period covered in the workpaper. Note your reasoning too.

Three lines. Two cases. One rule. The work is in the doing, not the idea.

Walkthrough: books open

The retail client has a calendar lease year. The 2025 books are still open in early March 2026. The firm''s close cycle runs through mid-March for the year-end package. The CAM reconciliation arrives March 8, 2026. The true-up is $5,400 and covers 2025.

If you booked no accrual for the expected true-up, here is the entry as of December 31, 2025:

Account	Debit	Credit
Operating expense: CAM true-up	$5,400
Accrued occupancy liability		$5,400

When the actual payment clears in April 2026:

Account	Debit	Credit
Accrued occupancy liability	$5,400
Cash		$5,400

Say you already booked a year-end accrual of $4,800. You based it on prior reconciliation patterns. Here is the unwind:

Account	Debit	Credit
Accrued occupancy liability	$4,800
Operating expense: CAM true-up	$600
Accounts payable		$5,400

The $600 is the gap between your estimate and the actual bill. That gap lands in the period you learn the actual. Most of the expense, $4,800, sits in 2025 where it belongs.

Walkthrough: books closed

Same client, same reconciliation. But the bill arrives May 2, 2026. The 2025 books were locked April 1 after the package went out.

The answer is current-period treatment. You post it as a prior-period adjustment to operating expense:

Account	Debit	Credit
Operating expense: prior period CAM true-up	$5,400
Accounts payable		$5,400

The workpaper notes three things. The bill covers 2025. The books were closed. The bill ran through the current period because of that. Most small and mid-sized businesses have unaudited statements. For them, this is the right answer. You need no further action.

For audited companies, the materiality threshold matters. Materiality is the size at which an error could sway a reader. If the $5,400 tops the auditor''s materiality, talk it through. That call sits with the firm, the client, and the auditor. Most tenant reconciliation amounts fall below that line. Still, have the talk when the amount is unusually large.

"The period is the bookkeeping question. The amount is a separate question. Both have to be right. A clean entry on a wrong bill is only half the answer. The detection layer catches the bill. The close team catches the period." - Angel Campa, Founder, CAMAudit

Estimating the year-end accrual

The year-end accrual is a judgment call. You base it on prior reconciliation history. Here are three ways to do it, best first.

Use the prior-year run rate. Say the prior two reconciliations ran 6.2 percent above estimate. Apply 6.2 percent to this year''s monthly CAM estimates. Accrue that amount. This works best when the lease and property have been stable.

Use a landlord estimate. Some landlords send a draft reconciliation in late December or early January. It comes before the formal statement. If you have that number, use it. Check that the method matches the prior reconciliations.

Accrue zero with a note. The lease may be new. Or the history may be too jumpy to project. Then zero accrual is fine. Add a footnote that the reconciliation is pending. Flag the amount as material when the actual arrives.

The trade-off is materiality against precision. Take a $4,000 expected true-up on a $40 million revenue business. The exact accrual rarely matters. Now take a $40,000 expected true-up on a $4 million revenue business. Getting close is worth the work.

The refund case

Sometimes the reconciliation gives a credit, not a true-up. The period rule still holds.

Books open: debit the accrued occupancy liability if you accrued one. Or credit current-period operating expense. Then credit accounts receivable for the refund due. You can also note the credit goes against future rent.

Books closed: credit current-period operating expense for the refund.

The risk on refunds is double-counting. The landlord may apply the credit to next month''s rent bill. They may not cut a check. The AP team then posts a smaller rent payment. They book it as a current-period cut. They may miss that the credit relates to the prior year. The fix is one standard memo on every occupancy bill. Always state the period covered.

ASC 842 considerations

Some clients use ASC 842 lease accounting. For them, the CAM true-up is a variable lease payment. ASC 842 is the lease accounting standard. It covers variable payments not tied to an index or rate. You recognize those in the period incurred. The period-matching above fits the standard.

The right-of-use asset and lease liability math leaves out those variable payments. The right-of-use asset is the tenant''s recorded right to the space. CAM, taxes, and insurance pass-throughs usually fall here. They do not change the right-of-use asset. They flow through operating expense in the period incurred. The pattern matches what cash or accrual accounting would show for the variable part.

For clients new to ASC 842, this part is easy. The variable payments behave the same as they did before. The standard just puts the period-matching rule in writing.

When to flag the bill for review

This article is about the journal entry. There is a separate question. Is the bill correct under the lease?

Watch for a few signals. The year-over-year true-up jumps a lot. One category looks off. The reconciliation lists items the lease may not allow. When you see these, flag and escalate. CAMAudit''s estimated payment true-up detection rule catches the bill issues. The close team catches the period. Both run on the same document. The workpaper covers both.

This combined workflow makes a CAM-aware practice worth more to tenant clients. The close gets done right. The lease question gets surfaced. The client sees both kinds of value from one engagement.

Period treatment needs no CRE expertise. CRE means commercial real estate. It needs bookkeeping discipline. Build the habit of checking the period covered before you post any CAM bill. Then the year-over-year occupancy reports stop showing odd jumps. Those jumps come from period mismatches.

Period Treatment for Annual CAM Reconciliations