At the beginning of its fiscal year, Lakeside Inc. leased office space to LTT Corporation under a seven-year operating lease agreement. The contract calls for quarterly rent payments of $5,000 each. The office building was acquired by Lakeside at a cost of $1 million and was expected to have a useful life of 15 years with no residual value.
What will be the effect of the lease on LTT's earnings for the first year?