December $31,2021$ deferred lease rent impact will be zero. Compute the effect and make the appropriate adjustment based on the information computed and provided.

Using the data, compute the impact on the rent escalation on recording the lease rent for $2021.$ Refer to the discussion of the impact of rent escalation below.

You enter into an warehouse lease agreement that has the following terms and conditions.

Start of the lease$-$January $1,2021$

$10$ year lease term

The base rent for the first year $($assuming no GET$)$ is $()/((/$$ $5,500/))$ per month, which will be paid at the beginning of each month. The rent will escalate during the lease term beginning in year $2.$

The base rent for all of the years under this lease agreement are as follows:

ended $(12)/(31)()/(2021)$ is based on the base rent for year $1$ at $$5,500*12$ months $=$$$66,000$ lease expense paid during the year $2021.$

Prepare the adjustment identified from your analysis to record lease expense and lease payable as of$(12)/(31)()/(2021.)$

The accrual will recognize the lease expense on a straightline basis as of $(12)/(31)()/(2021)$ and reflect the deferred lease liability related to this effect as of $(12)/(31)()/(2021).$

The lease expense will be the straightline expense of $$79,500$ for the year ended$(12)/(31)()/(2021)$ and the deferred lease liability will be reflected as $$13,500$ as of $(12)/(31)()/(2021).$

Reconcile the unadjusted balances to the adjusted balances after taking into account the adjustment.

Reconciliation of the Unadjusted to Adjusted Balances

Key for adjustments:

Balance Sheet signs: Assets are $+$ numbers and Liabilitie$($s$)/($E$)$quity are $-$ numbers.

Income Statement sign: Expenses are $+$ numbers and Revenues are $-$ numbers.