Chapter 15, Problem 15.6P

Operating lease; scheduled rent increases

• LO15–4

On January 1, 2018, Sweetwater Furniture Company leased office space under a 21-year operating lease agreement. The contract calls for annual rent payments on December 31 of each year. The payments are $10,000 the first year and increase by $500 per year. Benefits expected from using the office space are expected to remain constant over the lease term.

Required:

Record Sweetwater’s rent payment at December 31, 2022 (the fifth rent payment) and December 31, 2032 (the fifteenth rent payment).