NOTE 15—LEASED PROPERTY

On February 15, 2019, a lease agreement became effective for tenant occupancy of the 23,924 square foot building owned by Torotel. Monthly installment payments of $11,500 began to be paid to us on March 1, 2019. The lease is for a sixty-two month term with monthly payments escalating periodically from $11,500 to $15,500. The tenant has the right to elect to purchase the building. The election to purchase must be made within the lease term or Torotel is not prohibited from placing the building up for public sale.

Torotel’s leased property by asset category was as follows:


	2020		2019
Land	$	265,000	$	265,000
Buildings and improvements		1,000,000		1,000,000
		1,265,000		1,265,000
Less accumulated depreciation		(707,000)		(659,000)
Net leased property	$	558,000	$	606,000

Depreciation resulting from the leased property amounted to $48,000 and $35,000 during fiscal year 2020 and 2019, respectively.