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Adjust the monthly straight-line amount for the remaining period by the amount of the monthly increase. For example, if your monthly payment was $1500 and increased by $150 per month, you should record $1,650 per month going forward.

The straight-line concept is based on the idea that the usage of the rental arrangement is on a consistent basis over time; that is, the rented asset is used at about the same rate from month to month. To calculate straight-line rent, aggregate the total cost of all rent payments, and divide by the total contract term.

A renewal is the re-creation of the legal relationship and the replacement of the old lease with a new lease. In an option to extend, the original term of the lease is extended without interruption. This distinction is highlighted in Buckerfields v.

The straight-line expense method has always been required for operating leases because a lessee controls the underlying asset consistently throughout the term of the lease, so the related expense must be recognized on a consistent basis as well.

Under U.S. GAAP, rent in a company's financial statements should be recorded on a straight-line basis. To calculate monthly rent expense on a straight-line basis, you must first calculate the total cash paid for rent over the entire lease life and then divide by the number of months (i.e. 4 years = 48 months).

Straight line basis is also applied in operating leases, where it is used to calculate the amount of rental payments due under a lease agreement. The payments will be equal for each period until the end of the lease..

Notify the landlord (or its agent) whether they want to exercise the option during a specified window of time. This is usually around six or three months before expiry, depending on the lease. Further, this notice is usually given in writing; comply with any of the pre-agreed criteria for the renewal to go ahead.