Lease Accounting On 1/1/20X1, Investor, Inc. ("Lessee") signed a Lease Agreement with Developer Inc. ("Land- lord") to lease Landlord's newly constructed hotel located at 1001 Jefferson Ave. in Springfield, CA. The lease term is 15 years, and the estimated life of the building is 40 years. Lessee will occupy all four floors of the building. The lease includes a renewal option, exercisable at the Landlord's option, to extend the contract for an additional five-year term. No purchase option is present in the contract. Lessee's monthly rental payments are $50,000 per month, due on the first of each month, and the monthly rental fee will escalate by 2% on Jan. 1 of each subsequent year of the contract. Lessee must also pay a monthly supplemental rental cost based on a percentage (1%) of its sales. From expe- rience, Lessee estimates that 1% of its sales should approximate an additional $10,000 per month. As of 1/1/20X1, the appraised value of the building is $17 million. There are no residual value guarantees pre