1. Certain operating lease agreements specify scheduled rent increases over the lease term. Such scheduled rent increases may, for example, be designed to provide an inducement or “rent holiday ” for the lessee, to reflect the anticipated effects of inflation, to ease the lessee’s near-term cash flow requirements, or to acknowledge the time value of money. For operating leases that include scheduled rent increases, is it ever appropriate for lessees or lessors to recognize rent expense or rental income on a basis other than the straight-line basis required by Statement 13? Response 2. The effects of those scheduled rent increases, which are included in minimum lease payment
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