Implicit Rental Rate

See: Opportunity Cost.

Your firm owns its own building. You have 50 lawyers in it...lawyering. You don't show as an expense on your income statement anything for the cost of rent.

Why? Well, you own the buidling. So why would you rent it from yourself?

Well, in fact, you would/should...or should at least track it as an expense. Why? Opportunity cost. You could, in theory, rent your building to another firm, collect money from that rent, and then use it for other stuff. Like more pens and paper and laptops-for-all.

So there is an implicit rental rate of your building that should be tracked and become part of the rent line on your income statement.