On July 1, 20X2, South Co. entered into a ten-year operating lease for a warehouse facility. The annual minimum lease payments are $100,000. In addition to the base rent, South pays a monthly allocation of the building's operating expenses, which amounted to $20,000 for the year ended June 30, 20X3. In the notes to South's June 30, 20X3, financial statements, what amounts of subsequent years' lease payments should be disclosed?
In an operating lease, required disclosures for the lessee will include the minimum lease payments for each of the five years following the balance sheet date and the aggregate amount of lease payments for the entire term of the lease. This amount is based only on the minimum lease payments and will exclude amounts paid for operating expenses. In South Co.'s financial statements ended June 30, 20X3, one year of the 10-year lease has elapsed. As a result, South would disclose the rents for each of the next 5 years at $100,000 per year and for the entire remaining 9 year term of the lease in the aggregate amount of $900,000.