Farhat, need your help. I have a case study for a class. Company A enters into a 10-year lease with that commences on 1/1/2024, at which point the space on that tower is reserved for Company A. Company A installs equipment on the tower on 1/1/2025, however, the customer will not begin paying rent until 1/1/2028 and will continue to pay for 10 years. Monthly rent begins at $2,000 and escalates 2.5% annually upon cash receipt. When should we start and stop recognizing GAAP revenue from this contract? Is it 2024 thru 2033 (commencement thru 10 year lease term) or 2024 thru 2037?
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Farhat, need your help. I have a case study for a class. Company A enters into a 10-year lease with that commences on 1/1/2024, at which point the
space on that tower is reserved for Company A. Company A installs equipment on the
tower on 1/1/2025, however, the customer will not begin paying rent until 1/1/2028 and will
continue to pay for 10 years. Monthly rent begins at $2,000 and escalates 2.5% annually
upon cash receipt. When should we start and stop recognizing GAAP revenue from this contract? Is it 2024 thru 2033 (commencement thru 10 year lease term) or 2024 thru 2037?