Daiva Corp. signs an agreement to rent office space to Jarvis Ltd. The lease is for 10 years. Under the terms of the lease, the “base rent” is:

$2,000 per month in years 1, 2, and 3

$3,000 per month in years 4 through 7

$4,000 per month in the last three years A. What is the average monthly rent for the 10-year period?

B. Under GAAP, what should the company record as monthly rent expense in Year 1?

C. How should the receipt of each $2,000 payment of rent in Year 1 be reflected in the fundamental accounting equation? What assets, liabilities, or revenues are affected?

D. How should the receipt of each $4,000 payment in Year 10 be reflected in the fundamental accounting equation? What assets, liabilities, or revenues are affected?