4. COMMITMENTS AND CONTINGENCIES Office Lease
CALEA entered into an 85-month lease that expires on March 31, 2018. Under the terms of the lease, the rent escalates by 2.5% an- nually over the term of the lease. The landlord abated the first seven months’ rent. The cap on increased operating charges is 3%.
Under GAAP, lease incentives and scheduled rent increases over a lease term are recognized on a straight-line basis over the term of the lease. The difference between the GAAP rent expense and the required lease payments is recorded as deferred rent in the ac- companying statement of financial position.
Future minimum lease payments, subject to increases based on operating expenses, real estate taxes and Consumer Price Index adjustments, are as follows:
For the Year Ending December 31, 2015 2016 2017 2018
Total Rent expense totaled $200,481 for the year ended December 31, 2014.
$208,398 213,608 218,948 36,641
$677,595
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