Carnival Cruise Lines provides exotic vacations on board luxurious passenger ships. In 1998. the company moved its offices and included the following note in its current annual report:

Required:
Based on these facts, do you think the company should report this obligation on its balance sheet'1 Explain.
If the obligation should be reported as a liability, how should the amount be measured 1

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Leases On March 27. 1998, the Company entered into a ten-year lease for 230.000 square feet of office space located in Miami, Florida. The Company moved its operation to this location in October 1998. The total rent payable over the ten-year term of the lease is approximately $24 million.