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Step rent is where you take the rental expense over the life of the leased asset and you amortize on a straight line basis. For example, if you are paying 10,000 a year for 20 years and then the rent goes up to 20,000 for another 20 years, then with straightlining that expense your rent expense would be 15,000 (600,000 total rent/480 months (12 months * 40 years). You incur additional expense the first 20 years and then the next 20 years you have the offset. After 40 years the expense is the same.

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Q: What does step rent mean?
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