ABC Co.

Rent Analysis
For the year ended 12/31/05

ZZZ Lease Term: 8/1/2004 - 7/31/2008 (48 months)

Lease
Payments FYE 12/31/04 FYE 12/31/05
8/1/04 - 7/31/05 303,060 126,275 176,785
8/1/05 - 7/31/06 309,121 128,801
8/1/06 - 7/31/07 315,304
8/1/07 - 7/31/08 321,610
Total Lease Payment 1,249,095 A
Average Monthly Payment 26,023

Actual Rent 126,275 305,586

SL Rent 130,114 312,274
Difference (3,839) (6,688)
Cum Diff Rent (3,839) (10,527)

Lease Payment Expense @ 12/31/2005 431,861 B

AJE:
Average Lease Payment @ 12/31/2005 442,388 dr RE
dr Rent Exp (p&l)
Deferred Lease Liabilities 10,527 cr Dif Rent Liab (BS)

2004 Portion of Deferred Lease Liabilities 3,096

2005 Portion of Deferred Lease Liabilities 7,431

Tickmark Legends
A - The auditor obtained the total lease payments from the lease agreement and noted the lease term from 8/1/04 to 7/31/08. The lease payment was increa
2% based on CPI calculation. As such, 2007 & 2008 lease payments are calculated based on a 2% CPI adjustment assumption.

B - Reviewed rent payment schedule and actual rent checks issued. The total lease payments since the inception of the lease agreement 8/1/04 to 12/31/05
$431,861. The total rent payment for the same period based on average rent is $442,388. As such, propose an adjustment as shown above.
5

FYE 12/31/06 FYE 12/31/07 FYE 12/31/08 Total

180,321
131,377 183,927
134,004 187,606

311,697 317,931 187,606 1,249,095

312,274 312,274 182,160 1,249,095
(576) 5,658 5,446
(11,104) (5,446) (0)

3,839
6,688
Rent Liab (BS) (10,527)

to 7/31/08. The lease payment was increased in the second year by

nt assumption.

of the lease agreement 8/1/04 to 12/31/05 (17 months) amounted to

djustment as shown above.