assurance

TRANSITION TO ASC TOPIC 842, LEASES A COMPREHENSIVE EXAMPLE

 

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TRANSITION TO ASC TOPIC 842, LEASES A COMPREHENSIVE EXAMPLE

The purpose of this document is to illustrate a comprehensive example of how to transition from current GAAP (ASC 840) to the new lease accounting standard (ASC 842). This example uses a single lease example, rather than a portfolio of leases, to illustrate the accounting under current guidance, the transition entry to ASC 842, and go forward accounting for leases that existed at the effective date. Note: Leases entered into or modified on or after the effective date would be accounted for based on lease accounting guidance in ASC 842 (i.e. not the transition guidance).

The example below includes various illustrations of rent calculations and tables. These calculations have been condensed for illustration purposes. The calculation schedules are available in Exhibit A and Exhibit B as attachments.

TABLE OF CONTENTS

...................................................................................................................................................................... 1

BASIC LEASE TERMS AND ASSUMPTIONS ............................................................................................. 2

STEP 1: ESTABLISH POPULATION, TRANSITION METHOD, AND RELEVANT PROVISIONS .............. 5

STEP 2: IDENTIFY THE LEASE TERM ....................................................................................................... 6

STEP 3: IDENTIFY LEASE PAYMENTS AND CALCULATE STRAIGHT-LINE EXPENSE ........................ 7

STEP 4: DETERMINE REMAINING LEASE PAYMENTS ........................................................................... 9

STEP 5: CALCULATE INITIAL LEASE LIABILITY ..................................................................................... 10

STEP 6: CALCULATE INITIAL RIGHT-OF-USE (ROU) ASSET ................................................................ 11

STEP 7: RECORD THE TRANSITION ENTRY .......................................................................................... 13

STEP 8: PREPARE NEW AMORTIZATION SCHEDULE FOR REMAINING TERM OF LEASE .............. 14

DISCLOSURE EXAMPLES – AT THE END OF YEAR ONE (I.E. 12/31/19) ............................................. 15

DISCLOSURE EXAMPLES – BLANK TEMPLATE .................................................................................... 18

EXHIBIT A: ASC 840 - OPERATING LEASE AMORTIZATION SCHEDULE……………………...………..22

EXHIBIT B: ASC 842 - OPERATING LEASE AMORTIZATION SCHEDULE...……………………………..24  

 

 

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BASIC LEASE TERMS AND ASSUMPTIONS

ABC, Inc. (ABC) enters into a lease for 50,000 square feet of office space in a 250,000 square foot building commencing on January 1, 2016 (commencement date) with an initial term of 10 years (120 months).

The lease agreement provides a 5-year renewal option which, at commencement, was not reasonably certain of exercise.

The lessor has provided 6 months of free rent (months 1 through 6) and a tenant improvement allowance of $250,000 for purposes of building out the office space. Payments under the lease agreement are due on the last day of every month. The base rent payment schedule from the lease agreement demonstrating the 3% annual escalation is as follows:

Implementation note: Reasonably certain (842) and reasonably assured (840) are intended to be interpreted similarly. A specific threshold is not provided for determining whether a renewal or termination option is reasonably certain/assured of exercise. Instead, the FASB provided factors that should be considered at the commencement date when determining the lease term. The FASB affirmed that at the commencement date, an entity should take into account all relevant economic factors (contractual, asset, entity, and market-based factors) when assessing whether an entity is reasonably certain to exercise an option to extend a lease. Examples of economic factors to consider include, but are not limited to, any of the following (ASC 842-10-55-26):  

a. Contractual terms and conditions for the optional periods compared with current market rates, such as:

I. The amount of lease payments in any optional period II. The amount of any variable lease payments or other contingent payments, such as

payments under termination penalties and residual value guarantees III. The terms and conditions of any options that are exercisable after initial optional

periods (for example, the terms and conditions of a purchase option that is exercisable at the end of an extension period at a rate that is currently below market rates).

b. Significant leasehold improvements that are expected to have significant economic value for the lessee when the option to extend or terminate the lease or to purchase the underlying asset becomes exercisable.

c. Costs relating to the termination of the lease and the signing of a new lease, such as negotiation costs, relocation costs, costs of identifying another underlying asset suitable for the lessee’s operations, or costs associated with returning the underlying asset in a contractually specified condition or to a contractually specified location.

d. The importance of that underlying asset to the lessee’s operations, considering, for example, whether the underlying asset is a specialized asset and the location of the underlying asset.

 

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Implementation note: Lease agreements often include a table summarizing rental rates throughout the lease term. These tables may or may not include the free rent periods offered by the lessor as there may be a separate schedule indicating the free rent period (if any). The table included above does not reflect the free rent period.

In addition to the rent payments prescribed by the schedule above, ABC is responsible for paying its share of real estate taxes and property insurance. The amounts due for real estate taxes and insurance are based on amounts billed to the landlord by the local government and insurance providers. At the end of 2019, the lessor forwarded a bill for real estate taxes and insurance in the amount of $45,000.

At the commencement date, ABC had determined that the lease was an operating lease.

In the lead up to execution of the lease agreement, legal fees and document processing costs were incurred by ABC totaling $125,000. Based on guidance in ASC 840 these costs were determined to qualify as initial direct costs given they were incurred to originate the lease with an independent third party, the costs resulted directly from and were essential to acquiring the lease, and the costs would not have been incurred had the leasing arrangement not occurred.

Implementation note: The definition of initial direct costs included in ASC 840 was broader and allowed more latitude in determining what type of costs qualify for capitalization. For example, ASC 840 allows for the inclusion of costs that are incremental that would not have been incurred if the lease had not been obtained as well as costs related to evaluation of prospective lessee financial condition, evaluating and recording guarantees, collateral, and other security arrangements, negotiating lease terms, preparing and processing lease documents, and closing the transaction. ASC 842 narrowed the definition of initial direct cost to only those costs of a lease that would not have been incurred if the lease had not been obtained. Costs to negotiate or arrange a lease that would have been incurred regardless of whether the lease was obtained do not qualify as initial direct costs under ASC 842. However, if an entity elects the package of three transition practical expedients (ASC 842-10-65-1f), they do not need to reassess whether initial direct costs capitalized under ASC 840 qualify for capitalization under ASC 842 for all existing or expired leases at the effective date. Absent election of the package of three transition practical expedients, an entity would be required to reassess whether costs previously capitalized as initial direct costs qualify for capitalization under ASC 842. In the example of ABC above, if the Company had not elected the package of three transition practical expedients, the legal fees for negotiating lease terms and document preparation costs would not qualify as initial direct costs as they would have been incurred even had the lease contract ultimately not been signed.

ABC is a private company and has elected to early adopt ASC 842 effective January 1, 2019. Since ABC was unable to determine the interest rate implicit in the lease, they considered their option to either use their incremental borrowing rate or the risk-free rate for a similar term. ABC elected to use their incremental borrowing rate noting the Company’s strong credit rating and the availability of a recently entered into collateralized debt arrangement with a 10-year term and a principal balance similar to the total lease payments. One advantage of using the incremental borrowing rate is it will typically result in a lower present value calculation when calculating the initial lease liability because the rate is higher than the risk-free rate. The incremental borrowing rate of ABC at January 1, 2019 (initial application date) was 5%.

 

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Implementation note: The discount rate for the lease is the rate implicit in the lease unless that rate cannot be readily determined. In the event the rate implicit in the lease cannot be readily determined, a lessee is required to use the incremental borrowing rate. ASC 842-10-20 defines incremental borrowing rate as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Non-public business entities (NPBE), as a practical expedient, may elect to use the risk-free rate for a comparable period for all leases rather than using the implicit rate or incremental borrowing rate. The FASB provided this option for NPBEs after concluding that it would be too costly for some entities to identify an incremental borrowing rate that takes into account the credit of the lessee and the effect of the leased asset as collateral. The FASB determined that for some private companies, particularly those with little or no comparable borrowings, the costs to determine and audit their incremental borrowing rate would not be justified by the incremental benefits of using that rate. Entities should fully consider the available alternatives at adoption as election of the risk-free rate practical expedient applies to all leases and any change to this accounting policy in the future would need to be justified as preferable in accordance with ASC 250-10-45-2.

For example, an entity that has entered into a recent collateralized debt arrangement with a similar term and principle balance may have sufficient information available to reasonably estimate and support their incremental borrowing rate. An entity with unsecured debt or a lack of recent borrowings of a magnitude and term similar to that of the lease arrangement being evaluated may find it more difficult to estimate and support their incremental borrowing rate.

NPBEs should be aware that the risk-free rate is likely lower than their incremental borrowing rate, and therefore, would result in a higher lease liability and right-of-use asset when calculating the present value of the remaining minimum rental payments. Additionally, use of the lower risk-free rate could increase the possibility that the present value of lease payments and residual value guarantees would represent substantially all of the fair value of the leased asset resulting in classification of the lease as a finance lease. Remember that electing the package of three practical expedients eliminates this classification concern; however, going forward, any new or modified leases could be affected. Private companies will need to evaluate their specific needs when considering whether to use the risk-free rate versus the cost-benefit of the effort required to estimate their incremental borrowing rate.

 

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STEP 1: ESTABLISH POPULATION, TRANSITION METHOD, AND RELEVANT PROVISIONS

ABC has considered the transition methods available in ASC 842-10-65-1c and elected to initially apply ASC 842 as of the beginning of the year of adoption (i.e. January 1, 2019) as opposed to retrospectively applying the ASC 842 transition guidance as of the earliest comparative period presented.

ABC, Inc. has elected the package of three practical expedients available under ASC 842-10-65-1f as follows:

1. ABC will not reassess whether expired or existing contracts are or contain leases. 2. ABC will not reassess the lease classification for any expired or existing leases. 3. ABC will not reassess initial direct costs for any existing leases.

Implementation note: In the first practical expedient noted above, the FASB decided to allow entities not to reassess whether any expired or existing contracts are or contain leases because they found that in many cases, entities would reach the same lease versus non-lease conclusion under ASC 842 as they did under ASC 840. The FASB specifically noted in its basis for conclusions that the practical expedient does not grandfather an incorrect assessment determined in previous GAAP. Therefore, to the extent an entity has embedded leases that previously were not identified as leases and were instead accounted for as service contracts, an entity would be required to perform an analysis of their contract agreements that involve the use of assets to identify whether there are embedded leases that should have been accounted for under ASC 840.

Additionally, ABC has elected the practical expedient to use hindsight (ASC 842-10-65-1g) for purposes of determining the lease term.

ABC, Inc. has elected not to recognize leases on the balance sheet that have an initial term of twelve months or less (ASC 842-20-25-2). Short-term lease costs incurred during 2019 were $23,000.

Additional relevant provisions are included in the basic lease terms and assumptions sections above.

 

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STEP 2: IDENTIFY THE LEASE TERM

At commencement, ABC did not consider it reasonably certain that the 5-year renewal option would be exercised. However, given ABC elected the hindsight practical expedient, consideration is given to changes in facts and circumstances from the lease commencement date (January 1, 2016) through the effective date (January 1, 2019). ABC determined that there were no changes in facts and circumstances that would require a change to the initial lease term. Therefore, the lease term is 120 months.

Implementation note: ASC 842 allows entities to elect, as a practical expedient, to use hindsight when determining the lease term. The election of hindsight allows an entity to consider all facts and circumstances of which it is aware on the effective date to determine the lease term. The entity would not need to determine what it knew and what it thought back at the lease commencement date, rather they only need to determine the facts and circumstances that actually occurred or those facts and circumstances that exist at the effective date. For example, consider a ten-year lease with a five-year renewal option. At the commencement date, the entity determined they were reasonably assured of renewing that option. However, due to changing economic conditions, the entity subsequently determined they would not renew the lease at the end of the ten-year initial term. Election of the hindsight practical expedient would allow the entity to consider these changes in economic circumstances and account for the lease using a ten-year term rather than the fifteen-year term previously utilized under ASC 840. Election of hindsight must be applied consistently by an entity to all of its leases (including those for which the entity is a lessee or a lessor). When considering lessee options to extend or terminate the lease, to purchase the underlying asset and in assessing impairment of the entity’s right-of-use assets, an entity would consider all changes in facts and circumstances that have occurred through the effective date. However, any changes in facts and circumstances arising after the effective date would not be considered in applying the hindsight practical expedient.

An entity that identifies embedded leases that it had not historically been accounting for as a lease may find it difficult to consider facts and circumstances that existed at commencement, especially if the commencement date was several years prior. These entities may find the hindsight practical expedient beneficial. Additionally, in situations where a lease provides renewal or termination options where facts and circumstances have changed since the commencement of the initial lease term, an entity may find it beneficial to consider actual facts and circumstances through the effective date (e.g. an entity initially thought they would exercise an option to extend but ultimately did not exercise the option). It is important to note that hindsight is not limited to changes in discrete facts and circumstances. Use of hindsight would also apply to changes in market conditions, business plans, etc.

For entities that do not elect the package of three transition practical expedients, election of the hindsight practical expedient could change lease classification determinations if the lease term changes significantly as a result of reassessment. In determining lease classification, an entity must consider whether the lease term is for the major part of the remaining economic life of the underlying asset, unless the commencement date falls at or near the end of the economic life of the underlying asset in which case this criterion is not used for purposes of classifying a lease. A significant change in lease term could impact evaluation of this criteria. Additionally, an entity must consider whether the present value of the sum of the lease payments and any residual value guarantee by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset. A significant change in lease term will affect the calculation of the present value of lease payments and therefore could impact the evaluation of this classification criteria.

 

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STEP 3: IDENTIFY LEASE PAYMENTS AND CALCULATE STRAIGHT-LINE EXPENSE

While the lease commencement date is January 1, 2016, rental payments do not begin until July 31, 2016 as a result of the free rent period.

Implementation note: Leases with free rent periods often refer to the rent commencement date as the date on which rental payments actually begin. Be careful not to confuse the rent commencement date with the lease commencement date. The lease commencement date is the date on which a lessor makes an underlying asset available for use by a lessee and is the date on which the right-of-use asset and lease liability are initially recognized.

The total rent payments under the lease are $13,704,849.30 (see rent schedule below).

Implementation note: In ASC 840, executory costs such as payment of real estate taxes and insurance were not included in the determination of minimum lease payments. However, in ASC 842, such costs are included in lease payments to the extent that they are fixed. In the case of ABC, at transition, the minimum rental payments (as defined under ASC 840) are used for purposes of calculating the transition adjustment. Therefore, the real estate taxes and insurance are not included in calculating the initial lease liability.

Monthly rent expense under ASC 840 is recognized on a straight-line basis over the term of the lease agreement. The straight-line expense includes the monthly base rent, amortization of initial direct costs, and amortization of the incentives received. As noted in the fact pattern above, ABC incurred legal and document preparation costs of $125,000 and received incentives from the lessor of $250,000. The following graphics depict the calculation of the components of monthly lease expense as initially calculated under ASC 840. The calculations included in the graphics are monthly calculations that have been condensed to show annual totals. Please refer to Exhibit A and Exhibit B for the full monthly calculations.

 

 

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STEP 4: DETERMINE REMAINING LEASE PAYMENTS

Given ABC has elected to apply ASC 842 as of the beginning of the period of adoption (rather than retrospectively applying to the comparative period), the transition entry will be recorded as of January 1, 2019. The remaining payments at the adoption date can be obtained from the lease amortization schedule. From January 1, 2019 to December 31, 2025, 84 lease payments remain which total $10,466,224.20.

 

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STEP 5: CALCULATE INITIAL LEASE LIABILITY

ASC 842-10-65l requires the lease liability to be measured at the present value of the remaining minimum rental payments (as defined under ASC 840) using a discount rate for the lease established at the application date. As previously discussed, ABCs incremental borrowing rate is 5% at the application date (January 1, 2019).

Implementation note: If the hindsight practical expedient is elected and the lease term changes as a result, the present value would be calculated using the minimum rental payments (as defined under ASC 840) over the new term as if that term had always been used.

Using a discount rate of 5% with monthly payments paid at the end of the month, the present value of the remaining minimum rental payments (as defined under ASC 840) as of January 1, 2019 is $8,763,726.12. This balance will be recorded as the initial lease liability.

Implementation note: In this example, payments are due at the end of the month. Calculation of the present value of the remaining minimum rental payments should address the timing of when those payments are made (e.g. beginning or end of month).

 

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STEP 6: CALCULATE INITIAL RIGHT-OF-USE (ROU) ASSET

In accordance with ASC 842-20-35-3b, the initial ROU Asset is calculated as the amount of the lease liability ($8,763,726.12) adjusted for the following items:

1. Prepaid or accrued lease payments At the initial application date, ABC had a cumulative deferred rent liability balance of $872,829.69 as a result of recognizing rent payments on a straight-line basis over the term of the lease in accordance with ASC 840 (i.e. cash payments to date were less than the straight-line expense recognized which resulted in a liability). The calculation of this balance is reflected in the graphics below.

2. The remaining balance of any lease incentives received, which is the amount of the gross lease incentives received net of amounts recognized previously.

As previously described, ABC received $250,000 at the lease commencement date to be used for buildout of the Company’s office space. At the initial application date, the unamortized balance of the lease incentives received was $175,000 as shown in the amortization schedule below.

3. Unamortized initial direct costs As previously described, ABC incurred $125,000 of initial direct costs in the leadup to the commencement of its lease. The Company elected the package of three transition practical expedients and therefore did not reassess whether these costs qualify for capitalization under ASC 842. At the initial application date, the unamortized balance of the initial direct costs was $87,500. The calculation of this balance is reflected in the graphics below. Had ABC, Inc. not elected the package of three transition practical expedients, they would be required to evaluate whether their initial direct costs (i.e. legal and document preparation costs) continue to qualify for capitalization under ASC 842. Based on guidance in ASC 842, ABC would determine that these costs do not qualify and as a result, would write off the unamortized initial direct costs as part of the transition adjustment.

4. Impairment of the right-of-use asset At the initial application date, ABC noted there was no impairment of the right-of-use asset.

Implementation note: Entities are required to determine whether an ROU asset is impaired and should recognize any impairment loss in accordance with Section 360-10-35 on impairment or disposal of long-lived assets. Private entities making an accounting policy election to use the risk-free rate as the discount rate should be aware that use of the risk-free rate will result not only in a higher initial lease liability, but also a higher right of use asset than use of their incremental borrowing rate. A higher initial ROU asset may increase the likelihood of an impairment loss during the term of the lease.

At the initial application date, the balances of the deferred rent liability, unamortized lease incentives received, and unamortized initial direct costs incurred are reflected in the schedules below.

 

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Implementation note: The base rent schedule illustrated above is intended to calculate straight-line rent adjustments to comply with the requirements of ASC 840. Monthly deferred rent is calculated as the difference between the amount of cash paid and the monthly straight-line lease expense. Please refer to Exhibit A for a full calculation of the monthly deferred rent and cumulative deferred rent balances.

 

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STEP 7: RECORD THE TRANSITION ENTRY

The following entry is made on January 1, 2019 to record the initial right-of-use asset and lease liability and remove previously recorded asset and liability balances prior to transition.

Based on this fact pattern, there is no cumulative effect adjustment to the opening balance of equity on January 1, 2019.

Implementation note: In the example of ABC there is no cumulative effect adjustment primarily as a result of ABC electing the package of three transition practical expedients. An entity that does not elect the package of transition practical expedients may find that certain assets and liabilities (e.g. capitalized initial direct costs) no longer qualify for capitalization under ASC 842 and therefore would be written off as part of the transition adjustment. For example, as noted above, had ABC not elected the package of three transition practical expedients the initial direct costs (i.e. legal and document preparation costs) would not qualify for capitalization under ASC 842 and therefore the unamortized balance of these costs (i.e. $87,500) would be written off as part of a cumulative effect adjustment recorded at the time of transition. Whether or not there is a cumulative effect adjustment will depend on the specific facts and circumstances of the entity being evaluated and which practical expedients are being elected in transition.

 

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STEP 8: PREPARE NEW AMORTIZATION SCHEDULE FOR REMAINING TERM OF LEASE

Based on the initial calculations and entries recorded above, a new schedule should be prepared to track the lease liability and ROU asset balance going forward. In this example, the monthly straight-line lease expense recorded by ABC will be the same as it was under ASC 840 ($113,165.41). However, as noted in the immediately preceding implementation note, if the package of three transition practical expedients had not been elected, the initial direct costs would be written off as part of the cumulative effect adjustment, and therefore the monthly straight-line lease expense would change.

The full ASC 842 lease schedule is available in Exhibit B and illustrates monthly journal entries. A snapshot of the ASC 842 calculations is included below.

 

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DISCLOSURE EXAMPLES - at the end of year one (i.e. 12/31/19)

Note: There are new disclosure requirements under ASC Topic 842. A recent disclosure checklist should be used to ensure all required disclosures have been captured.

First example assumes this is their only lease (except for the short-term leases not capitalized)

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted the requirements of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The objective of this ASU, along with several related ASUs issued subsequently, is to increase transparency and comparability between organizations that enter into lease agreements. For lessees, the key difference of the new standard from the previous guidance (Topic 840) is the recognition of a right-of-use (ROU) asset and lease liability on the balance sheet. The most significant change is the requirement to recognize ROU assets and lease liabilities for leases classified as operating leases. The standard requires disclosures to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

As part of the transition to the new standard, the Company was required to measure and recognize leases that existed at January 1, 2019 using a modified retrospective approach. For leases existing at the effective date, the Company elected the package of three transition practical expedients and therefore did not reassess whether an arrangement is or contains a lease, did not reassess lease classification, and did not reassess what qualifies as an initial direct cost. Additionally, the company elected, as a practical expedient, to use hindsight for purposes of determining lease term.

The adoption of Topic 842 resulted in the recognition of an operating ROU asset and operating lease liability of $7,803,396 and $8,763,726, respectively as of January 1, 2019.

Significant Accounting Policies

Leases

At lease inception, the Company determines whether an arrangement is or contains a lease. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent operating lease liabilities in the consolidated financial statements. ROU assets represent the Company’s right to use leased assets over the term of the lease. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term.

For operating leases, ROU assets and lease liabilities are recognized at the commencement date. The lease liability is measured as the present value of the lease payments over the lease term. The Company uses the rate implicit in the lease if it is determinable. When the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate at the commencement date of the lease to determine the present value of the lease payments. Operating ROU assets are calculated as the present value of the remaining lease payments plus unamortized initial direct costs plus any prepayments less any unamortized lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize an ROU asset and obligation for leases with an initial term of twelve months or less. The expense associated with short term leases is included in lease expense in the statement of income.

 

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To the extent a lease arrangement includes both lease and non-lease components, the Company has elected to account for the components as a single lease component.

Note XX – Leases

Implementation note: For this case study, the entity has elected to apply ASC 842 as of the effective date as opposed to application as of the beginning of the earliest period presented. In this situation, the Company would include the required ASC 842 disclosure as illustrated below in addition to the required ASC 840 disclosures for the comparative periods presented. Therefore, ASC 840 disclosures are also required until comparative periods with ASC 840 presentation are no longer applicable. For example, a private company presenting two periods of financial statements would present ASC 842 disclosures for the period of adoption and ASC 840 disclosures for the comparative period. The following year, ASC 842 disclosures would be presented for both years presented and ASC 840 disclosures would no longer be required.

The Company has an operating lease of office space with a remaining lease term of 7 years. The lease includes a renewal option for an additional 5 years.

The components of lease expense were as follows: (the red letters below can be found in the table at the end of the note for case study purposes only)

December 31, 2019

Operating lease cost $ 1,357,985(a) Short-term lease cost (note the amount is given in case study facts) 23,000 Variable lease cost (note the amount is given in case study facts) 45,000

Total lease cost $ 1,425,985

Supplemental cash flow information related to the lease was as follows: Note: A separate supplemental disclosure of cash flow information related to the lease would not be required if it is presented in the statement of cash flows.

Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 1,365,909(b)

Supplemental balance sheet information related to leases was as follows: Note: A separate supplemental disclosure of balance sheet information related to leases would not be required if the operating lease ROU assets, current operating lease liabilities, and noncurrent operating lease liabilities are presented as separate line items in the balance sheet.

Operating Lease

Operating lease right-of-use assets 6,862,039(d) Current operating lease liabilities 1,039,777(f - e) Noncurrent operating lease liabilities 6,774,668(e) Total operating lease liabilities $ 7,814,445(f)

 

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December 31, 2019

Other information: Weighted average remaining lease term - operating lease 7 years Weighted-average discount rate – operating lease 5%

Lease Liability Maturities:

December 31, 2019

2020 $ 1,406,886(g) 2021 1,449,093(h) 2022 1,492,565(i) 2023 1,537,342(j) 2024 1,583,463(k) Thereafter 1,630,966(l)

Total 9,100,315 Less: Interest (1,285,870) Total lease cost $ 7,814,445(f)

As of December 31, 2019, the Company has no operating leases that have not yet commenced. REMINDER: The disclosure for the case study above only illustrates the disclosures required by ASC 842 for the specific fact pattern of ABC. Remember that in the year of adoption, if the entity has elected not to adjust comparative periods, ASC 840 disclosures are also required to be presented for all comparative periods presented under ASC 840. In the case of ABC above, given they present two periods of financial statements, they would present the ASC 842 disclosure (illustrated above) for 2019 and the ASC 840 disclosures for the 2018 comparative period (not included in illustration above). Source of Disclosure Information: The following table illustrates the source of the disclosed items above.

 

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DISCLOSURE EXAMPLES – BLANK TEMPLATE

The following disclosure assumes the following assumptions:

Initial application date is January 1, 2019 Election of the package of three transition practical expedients Election of the hindsight practical expedient Lease and non-lease components are accounted for separately (i.e. entity has not elected the

practical expedient which allows for lease and non-lease components to be accounted for as a single component)

Incremental borrowing rate is used as the discount rate Election made not to recognize short-term leases

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted the requirements of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). The objective of this ASU, along with several related ASUs issued subsequently, is to increase transparency and comparability between organizations that enter into lease agreements. For lessees, the key difference of the new standard from the previous guidance (Topic 840) is the recognition of a right-of-use (ROU) asset and lease liability on the balance sheet. The most significant change is the requirement to recognize ROU assets and lease liabilities for leases classified as operating leases. The standard requires disclosures to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases.

As part of the transition to the new standard, the Company was required to measure and recognize leases that existed at January 1, 20XX using a modified retrospective approach. For leases existing at the effective date, the Company elected the package of three transition practical expedients and therefore did not reassess whether an arrangement is or contains a lease, did not reassess lease classification, and did not reassess what qualifies as an initial direct cost.

The adoption of Topic 842 resulted in the recognition of operating ROU assets and lease liabilities of $XX and $XX, respectively, and finance lease ROU assets and lease liabilities of $XX and $XX, respectively. A cumulative effect adjustment of $XX was recorded at the initial application date of January 1, 2019. The accounting for finance leases remained substantially unchanged with the adoption of Topic 842.

Significant Accounting Policies

Leases

At lease inception, the Company determines whether an arrangement is or contains a lease. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and noncurrent lease liabilities in the consolidated financial statements. Finance leases are included in property and equipment, other current liabilities, and long-term liabilities in the consolidated financial statements.

ROU assets represent the Company’s right to use leased assets over the term of the lease. Lease liabilities represent the Company’s contractual obligation to make lease payments over the lease term.

For operating leases, ROU assets and lease liabilities are recognized at the commencement date. The lease liability is measured as the present value of the lease payments over the lease term. The Company uses the rate implicit in the lease if it is determinable. When the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate at the commencement date of the lease to determine the present value of the lease payments. Operating ROU assets are calculated as the present value of the lease payments plus initial direct costs, plus any prepayments less any lease incentives received. Lease terms may include renewal or extension options to the extent they are reasonably certain to be exercised. The assessment of whether renewal or extension options are reasonably certain to be exercised is made

 

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at lease commencement. Factors considered in determining whether an option is reasonably certain of exercise include, but are not limited to, the value of any leasehold improvements, the value of renewal rates compared to market rates, and the presence of factors that would cause a significant economic penalty to the Company if the option were not exercised. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected not to recognize an ROU asset and obligation for leases with an initial term of twelve months of less. The expense associated with short-term leases is included in lease expense in the statement of income.

For finance leases, after lease commencement the lease liability is measured on an amortized cost basis and increased to reflect interest on the liability and decreased to reflect the lease payment made during the period. Interest on the lease liability is determined each period during the lease term as the amount that results in a constant period discount rate on the remaining balance of the liability. The ROU asset is subsequently measured at cost, less any accumulated amortization and any accumulated impairment losses. Amortization on the ROU asset is recognized over the period from the commencement date to the earlier of (1) the end of the useful life of the ROU asset, or (2) the end of the lease term. The discount rate used by the Company for the finance leases is X.XX% which is the rate specified in the lease agreement (or other language, as appropriate) as the present value rate.

To the extent a lease arrangement includes both lease and non-lease components, the components are accounted for separately.

Note XX – Leases

The Company has operating leases on land, buildings, and equipment with remaining lease terms from X to Y years. Most leases include renewal options, with renewal terms extending up to XX years.

The components of lease expense were as follows:

December 31, 2019

Operating lease cost $ XX Finance lease cost: Amortization of right-of-use assets XX Interest on lease liabilities XX Short-term lease cost XX Variable lease cost XX Sublease income (XX)

Total lease cost $ XXX

 

20  

Supplemental cash flow information related to leases was as follows: Note: A separate supplemental disclosure of cash flow information related to the lease would not be required if it is presented in the statement of cash flows. The cumulative effect adjustment upon transition would not be disclosed here as an ROU asset obtained in exchange for new lease liabilities. However, new leases entered into during the year of adoption and thereafter would be presented as an ROU asset obtained in exchange for new lease liabilities.

Cash paid for amounts included in the measurement of lease liabilities $ XX Operating cash flows from operating leases XX Operating cash flows from finance leases XX Financing cash flows from finance leases XX Right-of-use assets obtained in exchange for new finance lease liabilities XX Right-of-use assets obtained in exchange for new operating lease liabilities XX

Supplemental balance sheet information related to leases was as follows: Note: A separate supplemental disclosure of balance sheet information related to leases would not be required if the operating lease ROU assets, current operating and finance lease liabilities, and noncurrent operating and finance lease liabilities are presented as separate line items in the balance sheet.

Operating Leases Operating lease right-of-use assets $ XX Current operating lease liabilities XX Noncurrent lease liabilities XX Total operating lease liabilities XX Finance Leases Property and equipment, gross XX Accumulated depreciation (XX) Property and equipment, net XX Current finance lease liabilities XX Noncurrent finance lease liabilities XX Total finance lease liabilities XX Operating cash flows from finance leases XX Operating cash flows from operating leases XX Financing cash flows from finance leases XX Right-of-use assets obtained in exchange for new finance lease Liabilities XX Right-of-use assets obtained in exchange for new operating lease liabilities XX

 

21  

December 31, 2019

Other information: (Gains) and losses on sale and leaseback transactions, net $ XX Weighted average remaining lease term - operating leases XX years Weighted-average remaining lease term - finance leases XX years Weighted-average discount rate – operating leases X% Weighted-average discount rate – finance leases X%

Lease Liability Maturities:

Operating Finance2020 $XX $XX2021 XX XX2022 XX XX2023 XX XX2024 XX XXThereafter XX XX

Total XX XXLess: Interest (XX) (XX)Lease Liability $ XX $ XX

As of December 31, 2019, the Company has additional operating leases that have not yet commenced of $XX million. These operating leases will commence in fiscal year 20XX with lease terms of XX years. As of December 31, 2019, we have additional finance leases that have not yet commenced of $XX million. These finance leases will commence in fiscal year 20XX with lease terms of XX years.

Expense

DateMonthly cash 

payment

Annual sum of 

cash payments

Base monthly 

rent expense

Annual base rent 

expense

 Deferred 

monthly rent 

Deferred annual 

rent

 Cumulative 

deferred rent  Date 

 Monthly IDC 

amortization 

 Annual 

amortization 

 Unamortized 

IDC  Date

Monthly 

incentive 

amortization

Annual 

amortization

Unamortized 

incentives Monthly expense

A ‐ C B ‐ D 125,000.00       250,000.00      

1/31/2016 ‐                      114,207.08           (114,207.08)   (114,207.08)     1/31/2016 1,041.67              123,958.33       1/31/2016 2,083.33           247,916.67       113,165.41        2/29/2016 ‐                      114,207.08           (114,207.08)   (228,414.16)     2/29/2016 1,041.67              122,916.67       2/29/2016 2,083.33           245,833.33       113,165.41        3/31/2016 ‐                      114,207.08           (114,207.08)   (342,621.23)     3/31/2016 1,041.67              121,875.00       3/31/2016 2,083.33           243,750.00       113,165.41        4/30/2016 ‐                      114,207.08           (114,207.08)   (456,828.31)     4/30/2016 1,041.67              120,833.33       4/30/2016 2,083.33           241,666.67       113,165.41        5/31/2016 ‐                      114,207.08           (114,207.08)   (571,035.39)     5/31/2016 1,041.67              119,791.67       5/31/2016 2,083.33           239,583.33       113,165.41        6/30/2016 ‐                      114,207.08           (114,207.08)   (685,242.47)     6/30/2016 1,041.67              118,750.00       6/30/2016 2,083.33           237,500.00       113,165.41        7/31/2016 104,166.67         114,207.08           (10,040.41)      (695,282.87)     7/31/2016 1,041.67              117,708.33       7/31/2016 2,083.33           235,416.67       113,165.41        8/31/2016 104,166.67         114,207.08           (10,040.41)      (705,323.28)     8/31/2016 1,041.67              116,666.67       8/31/2016 2,083.33           233,333.33       113,165.41        9/30/2016 104,166.67         114,207.08           (10,040.41)      (715,363.69)     9/30/2016 1,041.67              115,625.00       9/30/2016 2,083.33           231,250.00       113,165.41        

10/31/2016 104,166.67         114,207.08           (10,040.41)      (725,404.10)     10/31/2016 1,041.67              114,583.33       10/31/2016 2,083.33           229,166.67       113,165.41        11/30/2016 104,166.67         114,207.08           (10,040.41)      (735,444.50)     11/30/2016 1,041.67              113,541.67       11/30/2016 2,083.33           227,083.33       113,165.41        12/31/2016 104,166.67         625,000.02           114,207.08           1,370,484.93        (10,040.41)      (745,484.91)        (745,484.91)     12/31/2016 1,041.67              12,500.00              112,500.00       12/31/2016 2,083.33           25,000.00            225,000.00       113,165.41        1/31/2017 107,291.67         114,207.08           (6,915.41)        (752,400.32)     1/31/2017 1,041.67              111,458.33       1/31/2017 2,083.33           222,916.67       113,165.41        2/28/2017 107,291.67         114,207.08           (6,915.41)        (759,315.73)     2/28/2017 1,041.67              110,416.67       2/28/2017 2,083.33           220,833.33       113,165.41        3/31/2017 107,291.67         114,207.08           (6,915.41)        (766,231.13)     3/31/2017 1,041.67              109,375.00       3/31/2017 2,083.33           218,750.00       113,165.41        4/30/2017 107,291.67         114,207.08           (6,915.41)        (773,146.54)     4/30/2017 1,041.67              108,333.33       4/30/2017 2,083.33           216,666.67       113,165.41        5/31/2017 107,291.67         114,207.08           (6,915.41)        (780,061.95)     5/31/2017 1,041.67              107,291.67       5/31/2017 2,083.33           214,583.33       113,165.41        6/30/2017 107,291.67         114,207.08           (6,915.41)        (786,977.36)     6/30/2017 1,041.67              106,250.00       6/30/2017 2,083.33           212,500.00       113,165.41        7/31/2017 107,291.67         114,207.08           (6,915.41)        (793,892.76)     7/31/2017 1,041.67              105,208.33       7/31/2017 2,083.33           210,416.67       113,165.41        8/31/2017 107,291.67         114,207.08           (6,915.41)        (800,808.17)     8/31/2017 1,041.67              104,166.67       8/31/2017 2,083.33           208,333.33       113,165.41        9/30/2017 107,291.67         114,207.08           (6,915.41)        (807,723.58)     9/30/2017 1,041.67              103,125.00       9/30/2017 2,083.33           206,250.00       113,165.41        

10/31/2017 107,291.67         114,207.08           (6,915.41)        (814,638.99)     10/31/2017 1,041.67              102,083.33       10/31/2017 2,083.33           204,166.67       113,165.41        11/30/2017 107,291.67         114,207.08           (6,915.41)        (821,554.39)     11/30/2017 1,041.67              101,041.67       11/30/2017 2,083.33           202,083.33       113,165.41        12/31/2017 107,291.67         1,287,500.04        114,207.08           1,370,484.93        (6,915.41)        (82,984.89)          (828,469.80)     12/31/2017 1,041.67              12,500.00              100,000.00       12/31/2017 2,083.33           25,000.00            200,000.00       113,165.41        1/31/2018 110,510.42         114,207.08           (3,696.66)        (832,166.46)     1/31/2018 1,041.67              98,958.33         1/31/2018 2,083.33           197,916.67       113,165.41        2/28/2018 110,510.42         114,207.08           (3,696.66)        (835,863.11)     2/28/2018 1,041.67              97,916.67         2/28/2018 2,083.33           195,833.33       113,165.41        3/31/2018 110,510.42         114,207.08           (3,696.66)        (839,559.77)     3/31/2018 1,041.67              96,875.00         3/31/2018 2,083.33           193,750.00       113,165.41        4/30/2018 110,510.42         114,207.08           (3,696.66)        (843,256.43)     4/30/2018 1,041.67              95,833.33         4/30/2018 2,083.33           191,666.67       113,165.41        5/31/2018 110,510.42         114,207.08           (3,696.66)        (846,953.09)     5/31/2018 1,041.67              94,791.67         5/31/2018 2,083.33           189,583.33       113,165.41        6/30/2018 110,510.42         114,207.08           (3,696.66)        (850,649.74)     6/30/2018 1,041.67              93,750.00         6/30/2018 2,083.33           187,500.00       113,165.41        7/31/2018 110,510.42         114,207.08           (3,696.66)        (854,346.40)     7/31/2018 1,041.67              92,708.33         7/31/2018 2,083.33           185,416.67       113,165.41        8/31/2018 110,510.42         114,207.08           (3,696.66)        (858,043.06)     8/31/2018 1,041.67              91,666.67         8/31/2018 2,083.33           183,333.33       113,165.41        9/30/2018 110,510.42         114,207.08           (3,696.66)        (861,739.72)     9/30/2018 1,041.67              90,625.00         9/30/2018 2,083.33           181,250.00       113,165.41        

10/31/2018 110,510.42         114,207.08           (3,696.66)        (865,436.37)     10/31/2018 1,041.67              89,583.33         10/31/2018 2,083.33           179,166.67       113,165.41        11/30/2018 110,510.42         114,207.08           (3,696.66)        (869,133.03)     11/30/2018 1,041.67              88,541.67         11/30/2018 2,083.33           177,083.33       113,165.41        12/31/2018 110,510.42         1,326,125.04        114,207.08           1,370,484.93        (3,696.66)        (44,359.89)          (872,829.69)     12/31/2018 1,041.67              12,500.00              87,500.00         12/31/2018 2,083.33           25,000.00            175,000.00       113,165.41        1/31/2019 113,825.73         114,207.08           (381.35)           (873,211.04)     1/31/2019 1,041.67              86,458.33         1/31/2019 2,083.33           172,916.67       113,165.41        2/28/2019 113,825.73         114,207.08           (381.35)           (873,592.38)     2/28/2019 1,041.67              85,416.67         2/28/2019 2,083.33           170,833.33       113,165.41        3/31/2019 113,825.73         114,207.08           (381.35)           (873,973.73)     3/31/2019 1,041.67              84,375.00         3/31/2019 2,083.33           168,750.00       113,165.41        4/30/2019 113,825.73         114,207.08           (381.35)           (874,355.08)     4/30/2019 1,041.67              83,333.33         4/30/2019 2,083.33           166,666.67       113,165.41        5/31/2019 113,825.73         114,207.08           (381.35)           (874,736.43)     5/31/2019 1,041.67              82,291.67         5/31/2019 2,083.33           164,583.33       113,165.41        6/30/2019 113,825.73         114,207.08           (381.35)           (875,117.77)     6/30/2019 1,041.67              81,250.00         6/30/2019 2,083.33           162,500.00       113,165.41        7/31/2019 113,825.73         114,207.08           (381.35)           (875,499.12)     7/31/2019 1,041.67              80,208.33         7/31/2019 2,083.33           160,416.67       113,165.41        8/31/2019 113,825.73         114,207.08           (381.35)           (875,880.47)     8/31/2019 1,041.67              79,166.67         8/31/2019 2,083.33           158,333.33       113,165.41        9/30/2019 113,825.73         114,207.08           (381.35)           (876,261.82)     9/30/2019 1,041.67              78,125.00         9/30/2019 2,083.33           156,250.00       113,165.41        

10/31/2019 113,825.73         114,207.08           (381.35)           (876,643.16)     10/31/2019 1,041.67              77,083.33         10/31/2019 2,083.33           154,166.67       113,165.41        11/30/2019 113,825.73         114,207.08           (381.35)           (877,024.51)     11/30/2019 1,041.67              76,041.67         11/30/2019 2,083.33           152,083.33       113,165.41        12/31/2019 113,825.73         1,365,908.76        114,207.08           1,370,484.93        (381.35)           (4,576.17)            (877,405.86)     12/31/2019 1,041.67              12,500.00              75,000.00         12/31/2019 2,083.33           25,000.00            150,000.00       113,165.41        1/31/2020 117,240.50         114,207.08           3,033.42         (874,372.44)     1/31/2020 1,041.67              73,958.33         1/31/2020 2,083.33           147,916.67       113,165.41        2/29/2020 117,240.50         114,207.08           3,033.42         (871,339.02)     2/29/2020 1,041.67              72,916.67         2/29/2020 2,083.33           145,833.33       113,165.41        3/31/2020 117,240.50         114,207.08           3,033.42         (868,305.59)     3/31/2020 1,041.67              71,875.00         3/31/2020 2,083.33           143,750.00       113,165.41        4/30/2020 117,240.50         114,207.08           3,033.42         (865,272.17)     4/30/2020 1,041.67              70,833.33         4/30/2020 2,083.33           141,666.67       113,165.41        5/31/2020 117,240.50         114,207.08           3,033.42         (862,238.75)     5/31/2020 1,041.67              69,791.67         5/31/2020 2,083.33           139,583.33       113,165.41        6/30/2020 117,240.50         114,207.08           3,033.42         (859,205.33)     6/30/2020 1,041.67              68,750.00         6/30/2020 2,083.33           137,500.00       113,165.41        7/31/2020 117,240.50         114,207.08           3,033.42         (856,171.90)     7/31/2020 1,041.67              67,708.33         7/31/2020 2,083.33           135,416.67       113,165.41        8/31/2020 117,240.50         114,207.08           3,033.42         (853,138.48)     8/31/2020 1,041.67              66,666.67         8/31/2020 2,083.33           133,333.33       113,165.41        9/30/2020 117,240.50         114,207.08           3,033.42         (850,105.06)     9/30/2020 1,041.67              65,625.00         9/30/2020 2,083.33           131,250.00       113,165.41        

10/31/2020 117,240.50         114,207.08           3,033.42         (847,071.64)     10/31/2020 1,041.67              64,583.33         10/31/2020 2,083.33           129,166.67       113,165.41        11/30/2020 117,240.50         114,207.08           3,033.42         (844,038.21)     11/30/2020 1,041.67              63,541.67         11/30/2020 2,083.33           127,083.33       113,165.41        12/31/2020 117,240.50         1,406,886.00        114,207.08           1,370,484.93        3,033.42         36,401.07            (841,004.79)     12/31/2020 1,041.67              12,500.00              62,500.00         12/31/2020 2,083.33           25,000.00            125,000.00       113,165.41        

Initial Direct Costs IncentivesBase Rent

Exhibit A ‐ ASC 840 Operating Lease Amortization Schedule

22

Expense

DateMonthly cash 

payment

Annual sum of 

cash payments

Base monthly 

rent expense

Annual base rent 

expense

 Deferred 

monthly rent 

Deferred annual 

rent

 Cumulative 

deferred rent  Date 

 Monthly IDC 

amortization 

 Annual 

amortization 

 Unamortized 

IDC  Date

Monthly 

incentive 

amortization

Annual 

amortization

Unamortized 

incentives Monthly expense

Initial Direct Costs IncentivesBase Rent

Exhibit A ‐ ASC 840 Operating Lease Amortization Schedule

1/31/2021 120,757.72         114,207.08           6,550.64         (834,454.15)     1/31/2021 1,041.67              61,458.33         1/31/2021 2,083.33           122,916.67       113,165.41        2/28/2021 120,757.72         114,207.08           6,550.64         (827,903.51)     2/28/2021 1,041.67              60,416.67         2/28/2021 2,083.33           120,833.33       113,165.41        3/31/2021 120,757.72         114,207.08           6,550.64         (821,352.86)     3/31/2021 1,041.67              59,375.00         3/31/2021 2,083.33           118,750.00       113,165.41        4/30/2021 120,757.72         114,207.08           6,550.64         (814,802.22)     4/30/2021 1,041.67              58,333.33         4/30/2021 2,083.33           116,666.67       113,165.41        5/31/2021 120,757.72         114,207.08           6,550.64         (808,251.58)     5/31/2021 1,041.67              57,291.67         5/31/2021 2,083.33           114,583.33       113,165.41        6/30/2021 120,757.72         114,207.08           6,550.64         (801,700.94)     6/30/2021 1,041.67              56,250.00         6/30/2021 2,083.33           112,500.00       113,165.41        7/31/2021 120,757.72         114,207.08           6,550.64         (795,150.29)     7/31/2021 1,041.67              55,208.33         7/31/2021 2,083.33           110,416.67       113,165.41        8/31/2021 120,757.72         114,207.08           6,550.64         (788,599.65)     8/31/2021 1,041.67              54,166.67         8/31/2021 2,083.33           108,333.33       113,165.41        9/30/2021 120,757.72         114,207.08           6,550.64         (782,049.01)     9/30/2021 1,041.67              53,125.00         9/30/2021 2,083.33           106,250.00       113,165.41        

10/31/2021 120,757.72         114,207.08           6,550.64         (775,498.37)     10/31/2021 1,041.67              52,083.33         10/31/2021 2,083.33           104,166.67       113,165.41        11/30/2021 120,757.72         114,207.08           6,550.64         (768,947.72)     11/30/2021 1,041.67              51,041.67         11/30/2021 2,083.33           102,083.33       113,165.41        12/31/2021 120,757.72         1,449,092.64        114,207.08           1,370,484.93        6,550.64         78,607.71            (762,397.08)     12/31/2021 1,041.67              12,500.00              50,000.00         12/31/2021 2,083.33           25,000.00            100,000.00       113,165.41        1/31/2022 124,380.45         114,207.08           10,173.37       (752,223.71)     1/31/2022 1,041.67              48,958.33         1/31/2022 2,083.33           97,916.67         113,165.41        2/28/2022 124,380.45         114,207.08           10,173.37       (742,050.34)     2/28/2022 1,041.67              47,916.67         2/28/2022 2,083.33           95,833.33         113,165.41        3/31/2022 124,380.45         114,207.08           10,173.37       (731,876.96)     3/31/2022 1,041.67              46,875.00         3/31/2022 2,083.33           93,750.00         113,165.41        4/30/2022 124,380.45         114,207.08           10,173.37       (721,703.59)     4/30/2022 1,041.67              45,833.33         4/30/2022 2,083.33           91,666.67         113,165.41        5/31/2022 124,380.45         114,207.08           10,173.37       (711,530.22)     5/31/2022 1,041.67              44,791.67         5/31/2022 2,083.33           89,583.33         113,165.41        6/30/2022 124,380.45         114,207.08           10,173.37       (701,356.85)     6/30/2022 1,041.67              43,750.00         6/30/2022 2,083.33           87,500.00         113,165.41        7/31/2022 124,380.45         114,207.08           10,173.37       (691,183.47)     7/31/2022 1,041.67              42,708.33         7/31/2022 2,083.33           85,416.67         113,165.41        8/31/2022 124,380.45         114,207.08           10,173.37       (681,010.10)     8/31/2022 1,041.67              41,666.67         8/31/2022 2,083.33           83,333.33         113,165.41        9/30/2022 124,380.45         114,207.08           10,173.37       (670,836.73)     9/30/2022 1,041.67              40,625.00         9/30/2022 2,083.33           81,250.00         113,165.41        

10/31/2022 124,380.45         114,207.08           10,173.37       (660,663.36)     10/31/2022 1,041.67              39,583.33         10/31/2022 2,083.33           79,166.67         113,165.41        11/30/2022 124,380.45         114,207.08           10,173.37       (650,489.98)     11/30/2022 1,041.67              38,541.67         11/30/2022 2,083.33           77,083.33         113,165.41        12/31/2022 124,380.45         1,492,565.40        114,207.08           1,370,484.93        10,173.37       122,080.47         (640,316.61)     12/31/2022 1,041.67              12,500.00              37,500.00         12/31/2022 2,083.33           25,000.00            75,000.00         113,165.41        1/31/2023 128,111.86         114,207.08           13,904.78       (626,411.83)     1/31/2023 1,041.67              36,458.33         1/31/2023 2,083.33           72,916.67         113,165.41        2/28/2023 128,111.86         114,207.08           13,904.78       (612,507.05)     2/28/2023 1,041.67              35,416.67         2/28/2023 2,083.33           70,833.33         113,165.41        3/31/2023 128,111.86         114,207.08           13,904.78       (598,602.26)     3/31/2023 1,041.67              34,375.00         3/31/2023 2,083.33           68,750.00         113,165.41        4/30/2023 128,111.86         114,207.08           13,904.78       (584,697.48)     4/30/2023 1,041.67              33,333.33         4/30/2023 2,083.33           66,666.67         113,165.41        5/31/2023 128,111.86         114,207.08           13,904.78       (570,792.70)     5/31/2023 1,041.67              32,291.67         5/31/2023 2,083.33           64,583.33         113,165.41        6/30/2023 128,111.86         114,207.08           13,904.78       (556,887.92)     6/30/2023 1,041.67              31,250.00         6/30/2023 2,083.33           62,500.00         113,165.41        7/31/2023 128,111.86         114,207.08           13,904.78       (542,983.13)     7/31/2023 1,041.67              30,208.33         7/31/2023 2,083.33           60,416.67         113,165.41        8/31/2023 128,111.86         114,207.08           13,904.78       (529,078.35)     8/31/2023 1,041.67              29,166.67         8/31/2023 2,083.33           58,333.33         113,165.41        9/30/2023 128,111.86         114,207.08           13,904.78       (515,173.57)     9/30/2023 1,041.67              28,125.00         9/30/2023 2,083.33           56,250.00         113,165.41        

10/31/2023 128,111.86         114,207.08           13,904.78       (501,268.79)     10/31/2023 1,041.67              27,083.33         10/31/2023 2,083.33           54,166.67         113,165.41        11/30/2023 128,111.86         114,207.08           13,904.78       (487,364.00)     11/30/2023 1,041.67              26,041.67         11/30/2023 2,083.33           52,083.33         113,165.41        12/31/2023 128,111.86         1,537,342.32        114,207.08           1,370,484.93        13,904.78       166,857.39         (473,459.22)     12/31/2023 1,041.67              12,500.00              25,000.00         12/31/2023 2,083.33           25,000.00            50,000.00         113,165.41        1/31/2024 131,955.22         114,207.08           17,748.14       (455,711.08)     1/31/2024 1,041.67              23,958.33         1/31/2024 2,083.33           47,916.67         113,165.41        2/29/2024 131,955.22         114,207.08           17,748.14       (437,962.94)     2/29/2024 1,041.67              22,916.67         2/29/2024 2,083.33           45,833.33         113,165.41        3/31/2024 131,955.22         114,207.08           17,748.14       (420,214.79)     3/31/2024 1,041.67              21,875.00         3/31/2024 2,083.33           43,750.00         113,165.41        4/30/2024 131,955.22         114,207.08           17,748.14       (402,466.65)     4/30/2024 1,041.67              20,833.33         4/30/2024 2,083.33           41,666.67         113,165.41        5/31/2024 131,955.22         114,207.08           17,748.14       (384,718.51)     5/31/2024 1,041.67              19,791.67         5/31/2024 2,083.33           39,583.33         113,165.41        6/30/2024 131,955.22         114,207.08           17,748.14       (366,970.37)     6/30/2024 1,041.67              18,750.00         6/30/2024 2,083.33           37,500.00         113,165.41        7/31/2024 131,955.22         114,207.08           17,748.14       (349,222.22)     7/31/2024 1,041.67              17,708.33         7/31/2024 2,083.33           35,416.67         113,165.41        8/31/2024 131,955.22         114,207.08           17,748.14       (331,474.08)     8/31/2024 1,041.67              16,666.67         8/31/2024 2,083.33           33,333.33         113,165.41        9/30/2024 131,955.22         114,207.08           17,748.14       (313,725.94)     9/30/2024 1,041.67              15,625.00         9/30/2024 2,083.33           31,250.00         113,165.41        

10/31/2024 131,955.22         114,207.08           17,748.14       (295,977.80)     10/31/2024 1,041.67              14,583.33         10/31/2024 2,083.33           29,166.67         113,165.41        11/30/2024 131,955.22         114,207.08           17,748.14       (278,229.65)     11/30/2024 1,041.67              13,541.67         11/30/2024 2,083.33           27,083.33         113,165.41        12/31/2024 131,955.22         1,583,462.64        114,207.08           1,370,484.93        17,748.14       212,977.71         (260,481.51)     12/31/2024 1,041.67              12,500.00              12,500.00         12/31/2024 2,083.33           25,000.00            25,000.00         113,165.41        1/31/2025 135,913.87         114,207.08           21,706.79       (238,774.72)     1/31/2025 1,041.67              11,458.33         1/31/2025 2,083.33           22,916.67         113,165.41        2/28/2025 135,913.87         114,207.08           21,706.79       (217,067.93)     2/28/2025 1,041.67              10,416.67         2/28/2025 2,083.33           20,833.33         113,165.41        3/31/2025 135,913.87         114,207.08           21,706.79       (195,361.13)     3/31/2025 1,041.67              9,375.00           3/31/2025 2,083.33           18,750.00         113,165.41        4/30/2025 135,913.87         114,207.08           21,706.79       (173,654.34)     4/30/2025 1,041.67              8,333.33           4/30/2025 2,083.33           16,666.67         113,165.41        5/31/2025 135,913.87         114,207.08           21,706.79       (151,947.55)     5/31/2025 1,041.67              7,291.67           5/31/2025 2,083.33           14,583.33         113,165.41        6/30/2025 135,913.87         114,207.08           21,706.79       (130,240.76)     6/30/2025 1,041.67              6,250.00           6/30/2025 2,083.33           12,500.00         113,165.41        7/31/2025 135,913.87         114,207.08           21,706.79       (108,533.96)     7/31/2025 1,041.67              5,208.33           7/31/2025 2,083.33           10,416.67         113,165.41        8/31/2025 135,913.87         114,207.08           21,706.79       (86,827.17)       8/31/2025 1,041.67              4,166.67           8/31/2025 2,083.33           8,333.33           113,165.41        9/30/2025 135,913.87         114,207.08           21,706.79       (65,120.38)       9/30/2025 1,041.67              3,125.00           9/30/2025 2,083.33           6,250.00           113,165.41        

10/31/2025 135,913.87         114,207.08           21,706.79       (43,413.58)       10/31/2025 1,041.67              2,083.33           10/31/2025 2,083.33           4,166.67           113,165.41        11/30/2025 135,913.87         114,207.08           21,706.79       (21,706.79)       11/30/2025 1,041.67              1,041.67           11/30/2025 2,083.33           2,083.33           113,165.41        12/31/2025 135,913.87         1,630,966.44        114,207.08           1,370,484.93        21,706.79       260,481.51         ‐                    12/31/2025 1,041.67              12,500.00              ‐                    12/31/2025 2,083.33           25,000.00            ‐                    113,165.41        

Total 13,704,849.30      13,704,849.30      0.00                 0.00                     Total 125,000.00            Total 250,000.00          13,579,849.30  

23

Incremental borrowing rate @ 1/1/19 5%Unamortized IDC @ transition 87,500                     Unamortized incentives @ transition 175,000                   Accrued rent @ transition 872,829.69$           

Date ROU Asset Opening 

Balance 

 Monthly Lease 

Cost  Monthly Accretion   ROU Amortization 

ROU Asset Closing 

Balance 

Lease Liability 

Opening Balance  Rents Paid   Monthly Accretion 

Lease Liability 

Closing Balance Month  Cash   ROU Asset   Lease Liability    Expense 

          7,803,396.43            8,763,726.12 1 1/31/2019 7,803,396.43              113,165.41                              36,515.53  76,649.88              7,726,746.55         8,763,726.12                      113,825.73                 36,515.53  8,686,415.92         1/31/2019 (113,825.73)           (76,649.88)             77,310.20              113,165.41            2 2/28/2019 7,726,746.55              113,165.41                              36,193.40  76,972.01              7,649,774.54         8,686,415.92                      113,825.73                 36,193.40  8,608,783.59         2/28/2019 (113,825.73)           (76,972.01)             77,632.33              113,165.41            3 3/31/2019 7,649,774.54              113,165.41                              35,869.93  77,295.48              7,572,479.06         8,608,783.59                      113,825.73                 35,869.93  8,530,827.79         3/31/2019 (113,825.73)           (77,295.48)             77,955.80              113,165.41            4 4/30/2019 7,572,479.06              113,165.41                              35,545.12  77,620.29              7,494,858.77         8,530,827.79                      113,825.73                 35,545.12  8,452,547.18         4/30/2019 (113,825.73)           (77,620.29)             78,280.61              113,165.41            5 5/31/2019 7,494,858.77              113,165.41                              35,218.95  77,946.46              7,416,912.31         8,452,547.18                      113,825.73                 35,218.95  8,373,940.39         5/31/2019 (113,825.73)           (77,946.46)             78,606.78              113,165.41            6 6/30/2019 7,416,912.31              113,165.41                              34,891.42  78,273.99              7,338,638.32         8,373,940.39                      113,825.73                 34,891.42  8,295,006.08         6/30/2019 (113,825.73)           (78,273.99)             78,934.31              113,165.41            7 7/31/2019 7,338,638.32              113,165.41                              34,562.53  78,602.88              7,260,035.44         8,295,006.08                      113,825.73                 34,562.53  8,215,742.88         7/31/2019 (113,825.73)           (78,602.88)             79,263.20              113,165.41            8 8/31/2019 7,260,035.44              113,165.41                              34,232.26  78,933.15              7,181,102.29         8,215,742.88                      113,825.73                 34,232.26  8,136,149.41         8/31/2019 (113,825.73)           (78,933.15)             79,593.47              113,165.41            9 9/30/2019 7,181,102.29              113,165.41                              33,900.62  79,264.79              7,101,837.50         8,136,149.41                      113,825.73                 33,900.62  8,056,224.30         9/30/2019 (113,825.73)           (79,264.79)             79,925.11              113,165.41            10 10/31/2019 7,101,837.50              113,165.41                              33,567.60  79,597.81              7,022,239.69         8,056,224.30                      113,825.73                 33,567.60  7,975,966.17         10/31/2019 (113,825.73)           (79,597.81)             80,258.13              113,165.41            11 11/30/2019 7,022,239.69              113,165.41                              33,233.19  79,932.22              6,942,307.47         7,975,966.17                      113,825.73                 33,233.19  7,895,373.64         11/30/2019 (113,825.73)           (79,932.22)             80,592.54              113,165.41            12 12/31/2019 6,942,307.47              113,165.41                              32,897.39  80,268.02              6,862,039.45         7,895,373.64                      113,825.73                 32,897.39  7,814,445.30         12/31/2019 (113,825.73)           (80,268.02)             80,928.34              113,165.41            13 1/31/2020 6,862,039.45              113,165.41                              32,560.19  80,605.22              6,781,434.23         7,814,445.30                      117,240.50                 32,560.19  7,729,764.98         1/31/2020 (117,240.50)           (80,605.22)             84,680.31              113,165.41            14 2/29/2020 6,781,434.23              113,165.41                              32,207.35  80,958.06              6,700,476.17         7,729,764.98                      117,240.50                 32,207.35  7,644,731.84         2/29/2020 (117,240.50)           (80,958.06)             85,033.15              113,165.41            15 3/31/2020 6,700,476.17              113,165.41                              31,853.05  81,312.36              6,619,163.81         7,644,731.84                      117,240.50                 31,853.05  7,559,344.39         3/31/2020 (117,240.50)           (81,312.36)             85,387.45              113,165.41            16 4/30/2020 6,619,163.81              113,165.41                              31,497.27  81,668.14              6,537,495.67         7,559,344.39                      117,240.50                 31,497.27  7,473,601.16         4/30/2020 (117,240.50)           (81,668.14)             85,743.23              113,165.41            17 5/31/2020 6,537,495.67              113,165.41                              31,140.00  82,025.41              6,455,470.26         7,473,601.16                      117,240.50                 31,140.00  7,387,500.66         5/31/2020 (117,240.50)           (82,025.41)             86,100.50              113,165.41            18 6/30/2020 6,455,470.26              113,165.41                              30,781.25  82,384.16              6,373,086.10         7,387,500.66                      117,240.50                 30,781.25  7,301,041.41         6/30/2020 (117,240.50)           (82,384.16)             86,459.25              113,165.41            19 7/31/2020 6,373,086.10              113,165.41                              30,421.01  82,744.40              6,290,341.70         7,301,041.41                      117,240.50                 30,421.01  7,214,221.92         7/31/2020 (117,240.50)           (82,744.40)             86,819.49              113,165.41            20 8/31/2020 6,290,341.70              113,165.41                              30,059.26  83,106.15              6,207,235.55         7,214,221.92                      117,240.50                 30,059.26  7,127,040.68         8/31/2020 (117,240.50)           (83,106.15)             87,181.24              113,165.41            21 9/30/2020 6,207,235.55              113,165.41                              29,696.00  83,469.41              6,123,766.14         7,127,040.68                      117,240.50                 29,696.00  7,039,496.18         9/30/2020 (117,240.50)           (83,469.41)             87,544.50              113,165.41            22 10/31/2020 6,123,766.14              113,165.41                              29,331.23  83,834.18              6,039,931.96         7,039,496.18                      117,240.50                 29,331.23  6,951,586.91         10/31/2020 (117,240.50)           (83,834.18)             87,909.27              113,165.41            23 11/30/2020 6,039,931.96              113,165.41                              28,964.95  84,200.46              5,955,731.50         6,951,586.91                      117,240.50                 28,964.95  6,863,311.36         11/30/2020 (117,240.50)           (84,200.46)             88,275.55              113,165.41            24 12/31/2020 5,955,731.50              113,165.41                              28,597.13  84,568.28              5,871,163.22         6,863,311.36                      117,240.50                 28,597.13  6,774,667.99         12/31/2020 (117,240.50)           (84,568.28)             88,643.37              113,165.41            25 1/31/2021 5,871,163.22              113,165.41                              28,227.78  84,937.63              5,786,225.59         6,774,667.99                      120,757.72                 28,227.78  6,682,138.05         1/31/2021 (120,757.72)           (84,937.63)             92,529.94              113,165.41            26 2/28/2021 5,786,225.59              113,165.41                              27,842.24  85,323.17              5,700,902.42         6,682,138.05                      120,757.72                 27,842.24  6,589,222.58         2/28/2021 (120,757.72)           (85,323.17)             92,915.48              113,165.41            27 3/31/2021 5,700,902.42              113,165.41                              27,455.09  85,710.32              5,615,192.10         6,589,222.58                      120,757.72                 27,455.09  6,495,919.95         3/31/2021 (120,757.72)           (85,710.32)             93,302.63              113,165.41            28 4/30/2021 5,615,192.10              113,165.41                              27,066.33  86,099.08              5,529,093.02         6,495,919.95                      120,757.72                 27,066.33  6,402,228.56         4/30/2021 (120,757.72)           (86,099.08)             93,691.39              113,165.41            29 5/31/2021 5,529,093.02              113,165.41                              26,675.95  86,489.46              5,442,603.56         6,402,228.56                      120,757.72                 26,675.95  6,308,146.80         5/31/2021 (120,757.72)           (86,489.46)             94,081.77              113,165.41            30 6/30/2021 5,442,603.56              113,165.41                              26,283.94  86,881.47              5,355,722.09         6,308,146.80                      120,757.72                 26,283.94  6,213,673.02         6/30/2021 (120,757.72)           (86,881.47)             94,473.78              113,165.41            31 7/31/2021 5,355,722.09              113,165.41                              25,890.30  87,275.11              5,268,446.98         6,213,673.02                      120,757.72                 25,890.30  6,118,805.60         7/31/2021 (120,757.72)           (87,275.11)             94,867.42              113,165.41            32 8/31/2021 5,268,446.98              113,165.41                              25,495.02  87,670.39              5,180,776.59         6,118,805.60                      120,757.72                 25,495.02  6,023,542.91         8/31/2021 (120,757.72)           (87,670.39)             95,262.70              113,165.41            33 9/30/2021 5,180,776.59              113,165.41                              25,098.10  88,067.31              5,092,709.28         6,023,542.91                      120,757.72                 25,098.10  5,927,883.28         9/30/2021 (120,757.72)           (88,067.31)             95,659.62              113,165.41            34 10/31/2021 5,092,709.28              113,165.41                              24,699.51  88,465.90              5,004,243.38         5,927,883.28                      120,757.72                 24,699.51  5,831,825.08         10/31/2021 (120,757.72)           (88,465.90)             96,058.21              113,165.41            35 11/30/2021 5,004,243.38              113,165.41                              24,299.27  88,866.14              4,915,377.24         5,831,825.08                      120,757.72                 24,299.27  5,735,366.63         11/30/2021 (120,757.72)           (88,866.14)             96,458.45              113,165.41            36 12/31/2021 4,915,377.24              113,165.41                              23,897.36  89,268.05              4,826,109.19         5,735,366.63                      120,757.72                 23,897.36  5,638,506.27         12/31/2021 (120,757.72)           (89,268.05)             96,860.36              113,165.41            37 1/31/2022 4,826,109.19              113,165.41                              23,493.78  89,671.63              4,736,437.56         5,638,506.27                      124,380.45                 23,493.78  5,537,619.60         1/31/2022 (124,380.45)           (89,671.63)             100,886.67            113,165.41            38 2/28/2022 4,736,437.56              113,165.41                              23,073.41  90,092.00              4,646,345.56         5,537,619.60                      124,380.45                 23,073.41  5,436,312.56         2/28/2022 (124,380.45)           (90,092.00)             101,307.04            113,165.41            39 3/31/2022 4,646,345.56              113,165.41                              22,651.30  90,514.11              4,555,831.45         5,436,312.56                      124,380.45                 22,651.30  5,334,583.41         3/31/2022 (124,380.45)           (90,514.11)             101,729.15            113,165.41            40 4/30/2022 4,555,831.45              113,165.41                              22,227.43  90,937.98              4,464,893.47         5,334,583.41                      124,380.45                 22,227.43  5,232,430.39         4/30/2022 (124,380.45)           (90,937.98)             102,153.02            113,165.41            41 5/31/2022 4,464,893.47              113,165.41                              21,801.79  91,363.62              4,373,529.85         5,232,430.39                      124,380.45                 21,801.79  5,129,851.74         5/31/2022 (124,380.45)           (91,363.62)             102,578.66            113,165.41            42 6/30/2022 4,373,529.85              113,165.41                              21,374.38  91,791.03              4,281,738.82         5,129,851.74                      124,380.45                 21,374.38  5,026,845.67         6/30/2022 (124,380.45)           (91,791.03)             103,006.07            113,165.41            43 7/31/2022 4,281,738.82              113,165.41                              20,945.19  92,220.22              4,189,518.60         5,026,845.67                      124,380.45                 20,945.19  4,923,410.41         7/31/2022 (124,380.45)           (92,220.22)             103,435.26            113,165.41            44 8/31/2022 4,189,518.60              113,165.41                              20,514.21  92,651.20              4,096,867.40         4,923,410.41                      124,380.45                 20,514.21  4,819,544.17         8/31/2022 (124,380.45)           (92,651.20)             103,866.24            113,165.41            45 9/30/2022 4,096,867.40              113,165.41                              20,081.43  93,083.98              4,003,783.42         4,819,544.17                      124,380.45                 20,081.43  4,715,245.15         9/30/2022 (124,380.45)           (93,083.98)             104,299.02            113,165.41            46 10/31/2022 4,003,783.42              113,165.41                              19,646.85  93,518.56              3,910,264.86         4,715,245.15                      124,380.45                 19,646.85  4,610,511.56         10/31/2022 (124,380.45)           (93,518.56)             104,733.60            113,165.41            47 11/30/2022 3,910,264.86              113,165.41                              19,210.46  93,954.95              3,816,309.91         4,610,511.56                      124,380.45                 19,210.46  4,505,341.57         11/30/2022 (124,380.45)           (93,954.95)             105,169.99            113,165.41            48 12/31/2022 3,816,309.91              113,165.41                              18,772.26  94,393.15              3,721,916.76         4,505,341.57                      124,380.45                 18,772.26  4,399,733.38         12/31/2022 (124,380.45)           (94,393.15)             105,608.19            113,165.41            49 1/31/2023 3,721,916.76              113,165.41                              18,332.22  94,833.19              3,627,083.57         4,399,733.38                      128,111.86                 18,332.22  4,289,953.74         1/31/2023 (128,111.86)           (94,833.19)             109,779.64            113,165.41            50 2/28/2023 3,627,083.57              113,165.41                              17,874.81  95,290.60              3,531,792.97         4,289,953.74                      128,111.86                 17,874.81  4,179,716.69         2/28/2023 (128,111.86)           (95,290.60)             110,237.05            113,165.41            51 3/31/2023 3,531,792.97              113,165.41                              17,415.49  95,749.92              3,436,043.05         4,179,716.69                      128,111.86                 17,415.49  4,069,020.32         3/31/2023 (128,111.86)           (95,749.92)             110,696.37            113,165.41            52 4/30/2023 3,436,043.05              113,165.41                              16,954.25  96,211.16              3,339,831.89         4,069,020.32                      128,111.86                 16,954.25  3,957,862.71         4/30/2023 (128,111.86)           (96,211.16)             111,157.61            113,165.41            53 5/31/2023 3,339,831.89              113,165.41                              16,491.09  96,674.32              3,243,157.57         3,957,862.71                      128,111.86                 16,491.09  3,846,241.94         5/31/2023 (128,111.86)           (96,674.32)             111,620.77            113,165.41            

Exhibit B ‐ ASC 842 Operating Lease Amortization Schedule (Initial Application Date = January 1, 2019)

Lease Calculations

ROU Asset Amortization Schedule Lease Liability Accretion ScheduleMonthly Journal Entries

24

Incremental borrowing rate @ 1/1/19 5%Unamortized IDC @ transition 87,500                     Unamortized incentives @ transition 175,000                   Accrued rent @ transition 872,829.69$           

Date ROU Asset Opening 

Balance 

 Monthly Lease 

Cost  Monthly Accretion   ROU Amortization 

ROU Asset Closing 

Balance 

Lease Liability 

Opening Balance  Rents Paid   Monthly Accretion 

Lease Liability 

Closing Balance Month  Cash   ROU Asset   Lease Liability    Expense 

Exhibit B ‐ ASC 842 Operating Lease Amortization Schedule (Initial Application Date = January 1, 2019)

Lease Calculations

ROU Asset Amortization Schedule Lease Liability Accretion ScheduleMonthly Journal Entries

54 6/30/2023 3,243,157.57              113,165.41                              16,026.01  97,139.40              3,146,018.17         3,846,241.94                      128,111.86                 16,026.01  3,734,156.09         6/30/2023 (128,111.86)           (97,139.40)             112,085.85            113,165.41            55 7/31/2023 3,146,018.17              113,165.41                              15,558.98  97,606.43              3,048,411.74         3,734,156.09                      128,111.86                 15,558.98  3,621,603.21         7/31/2023 (128,111.86)           (97,606.43)             112,552.88            113,165.41            56 8/31/2023 3,048,411.74              113,165.41                              15,090.01  98,075.40              2,950,336.34         3,621,603.21                      128,111.86                 15,090.01  3,508,581.37         8/31/2023 (128,111.86)           (98,075.40)             113,021.85            113,165.41            57 9/30/2023 2,950,336.34              113,165.41                              14,619.09  98,546.32              2,851,790.02         3,508,581.37                      128,111.86                 14,619.09  3,395,088.60         9/30/2023 (128,111.86)           (98,546.32)             113,492.77            113,165.41            58 10/31/2023 2,851,790.02              113,165.41                              14,146.20  99,019.21              2,752,770.81         3,395,088.60                      128,111.86                 14,146.20  3,281,122.94         10/31/2023 (128,111.86)           (99,019.21)             113,965.66            113,165.41            59 11/30/2023 2,752,770.81              113,165.41                              13,671.35  99,494.06              2,653,276.75         3,281,122.94                      128,111.86                 13,671.35  3,166,682.42         11/30/2023 (128,111.86)           (99,494.06)             114,440.51            113,165.41            60 12/31/2023 2,653,276.75              113,165.41                              13,194.51  99,970.90              2,553,305.85         3,166,682.42                      128,111.86                 13,194.51  3,051,765.07         12/31/2023 (128,111.86)           (99,970.90)             114,917.35            113,165.41            61 1/31/2024 2,553,305.85              113,165.41                              12,715.69  100,449.72            2,452,856.13         3,051,765.07                      131,955.22                 12,715.69  2,932,525.54         1/31/2024 (131,955.22)           (100,449.72)           119,239.53            113,165.41            62 2/29/2024 2,452,856.13              113,165.41                              12,218.86  100,946.55            2,351,909.58         2,932,525.54                      131,955.22                 12,218.86  2,812,789.18         2/29/2024 (131,955.22)           (100,946.55)           119,736.36            113,165.41            63 3/31/2024 2,351,909.58              113,165.41                              11,719.95  101,445.46            2,250,464.12         2,812,789.18                      131,955.22                 11,719.95  2,692,553.91         3/31/2024 (131,955.22)           (101,445.46)           120,235.27            113,165.41            64 4/30/2024 2,250,464.12              113,165.41                              11,218.97  101,946.44            2,148,517.68         2,692,553.91                      131,955.22                 11,218.97  2,571,817.67         4/30/2024 (131,955.22)           (101,946.44)           120,736.25            113,165.41            65 5/31/2024 2,148,517.68              113,165.41                              10,715.91  102,449.50            2,046,068.18         2,571,817.67                      131,955.22                 10,715.91  2,450,578.35         5/31/2024 (131,955.22)           (102,449.50)           121,239.31            113,165.41            66 6/30/2024 2,046,068.18              113,165.41                              10,210.74  102,954.67            1,943,113.51         2,450,578.35                      131,955.22                 10,210.74  2,328,833.88         6/30/2024 (131,955.22)           (102,954.67)           121,744.48            113,165.41            67 7/31/2024 1,943,113.51              113,165.41                                9,703.47  103,461.94            1,839,651.57         2,328,833.88                      131,955.22                   9,703.47  2,206,582.13         7/31/2024 (131,955.22)           (103,461.94)           122,251.75            113,165.41            68 8/31/2024 1,839,651.57              113,165.41                                9,194.09  103,971.32            1,735,680.25         2,206,582.13                      131,955.22                   9,194.09  2,083,821.00         8/31/2024 (131,955.22)           (103,971.32)           122,761.13            113,165.41            69 9/30/2024 1,735,680.25              113,165.41                                8,682.59  104,482.82            1,631,197.43         2,083,821.00                      131,955.22                   8,682.59  1,960,548.37         9/30/2024 (131,955.22)           (104,482.82)           123,272.63            113,165.41            70 10/31/2024 1,631,197.43              113,165.41                                8,168.95  104,996.46            1,526,200.97         1,960,548.37                      131,955.22                   8,168.95  1,836,762.10         10/31/2024 (131,955.22)           (104,996.46)           123,786.27            113,165.41            71 11/30/2024 1,526,200.97              113,165.41                                7,653.18  105,512.23            1,420,688.74         1,836,762.10                      131,955.22                   7,653.18  1,712,460.06         11/30/2024 (131,955.22)           (105,512.23)           124,302.04            113,165.41            72 12/31/2024 1,420,688.74              113,165.41                                7,135.25  106,030.16            1,314,658.58         1,712,460.06                      131,955.22                   7,135.25  1,587,640.09         12/31/2024 (131,955.22)           (106,030.16)           124,819.97            113,165.41            73 1/31/2025 1,314,658.58              113,165.41                                6,615.17  106,550.24            1,208,108.34         1,587,640.09                      135,913.87                   6,615.17  1,458,341.39         1/31/2025 (135,913.87)           (106,550.24)           129,298.70            113,165.41            74 2/28/2025 1,208,108.34              113,165.41                                6,076.42  107,088.99            1,101,019.35         1,458,341.39                      135,913.87                   6,076.42  1,328,503.94         2/28/2025 (135,913.87)           (107,088.99)           129,837.45            113,165.41            75 3/31/2025 1,101,019.35              113,165.41                                5,535.43  107,629.98            993,389.37            1,328,503.94                      135,913.87                   5,535.43  1,198,125.50         3/31/2025 (135,913.87)           (107,629.98)           130,378.44            113,165.41            76 4/30/2025 993,389.37                 113,165.41                                4,992.19  108,173.22            885,216.15            1,198,125.50                      135,913.87                   4,992.19  1,067,203.82         4/30/2025 (135,913.87)           (108,173.22)           130,921.68            113,165.41            77 5/31/2025 885,216.15                 113,165.41                                4,446.68  108,718.73            776,497.42            1,067,203.82                      135,913.87                   4,446.68  935,736.63            5/31/2025 (135,913.87)           (108,718.73)           131,467.19            113,165.41            78 6/30/2025 776,497.42                 113,165.41                                3,898.90  109,266.51            667,230.91            935,736.63                         135,913.87                   3,898.90  803,721.67            6/30/2025 (135,913.87)           (109,266.51)           132,014.97            113,165.41            79 7/31/2025 667,230.91                 113,165.41                                3,348.84  109,816.57            557,414.34            803,721.67                         135,913.87                   3,348.84  671,156.64            7/31/2025 (135,913.87)           (109,816.57)           132,565.03            113,165.41            80 8/31/2025 557,414.34                 113,165.41                                2,796.49  110,368.92            447,045.42            671,156.64                         135,913.87                   2,796.49  538,039.25            8/31/2025 (135,913.87)           (110,368.92)           133,117.38            113,165.41            81 9/30/2025 447,045.42                 113,165.41                                2,241.83  110,923.58            336,121.84            538,039.25                         135,913.87                   2,241.83  404,367.21            9/30/2025 (135,913.87)           (110,923.58)           133,672.04            113,165.41            82 10/31/2025 336,121.84                 113,165.41                                1,684.86  111,480.55            224,641.29            404,367.21                         135,913.87                   1,684.86  270,138.21            10/31/2025 (135,913.87)           (111,480.55)           134,229.01            113,165.41            83 11/30/2025 224,641.29                 113,165.41                                1,125.58  112,039.83            112,601.46            270,138.21                         135,913.87                   1,125.58  135,349.91            11/30/2025 (135,913.87)           (112,039.83)           134,788.29            113,165.41            84 12/31/2025 112,601.46                 113,165.41                                    563.96  112,601.45            0.01                        135,349.91                         135,913.87                       563.96  0.00                        12/31/2025 (135,913.87)           (112,601.45)           135,349.91            113,165.41            

Totals 9,505,894.44           7,803,396.42         Total 10,466,224.20       Totals (10,466,224.20)     (7,803,396.42)        8,763,726.12         9,505,894.44         

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