Question
How you recommend the client record the following lease: The AP the prospective client, has entered into a 10- year contract to lease an entire
How you recommend the client record the following lease:
The AP the prospective client, has entered into a 10- year contract to lease an entire building commencing on January 1, 2019. The agreement has a one 5 year -renewable option at the clients discretion. The client is reasonably certain to exercise the 5-year renewal option.
Lease payments are $100,000 annually with a 2% escalation on January 1 st of each year.
The lease does not permit tenant improvements, early access or free rent.
There is no stated interest rate in the contract and the prospective client has determined its incremental borrowing rate is 4%.
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