Rental commencement and other payments: When do rental payments typically begin?

• A. On the Equipment Delivery Date
• B. On Signing
• C. After 60 Days
• D. Upon First Use

Answer: (A)

The key idea is when the lessee actually obtains the right to use and benefit from the equipment. Rental payments start when possession and use begin, which typically happens on the Equipment Delivery Date. Once delivery occurs, the lessee can operate the asset and the lease term effectively starts, so the lessor’s economic interest is being satisfied and revenue timing aligns with the transfer of control.

Signing the contract is a preparatory step and doesn’t grant possession or usage rights. Waiting 60 days creates unnecessary delay and can complicate revenue and cash flow timing for the lessor. Relying on “first use” can be ambiguous, since first use might occur at different times depending on installation, site readiness, or other conditions, whereas delivery clearly marks the start of the rental period.