Title: Accounting for a tenant improvement allowance — AccountingTools
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Accounting for a tenant improvement allowance
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Content: If the building is subsequently destroyed or damaged, the lessor writes off the remaining undepreciated balance of the expenditure, which appears in the income statement as a loss. Flow-through arrangement. If the lessor is directly reimbursing the lessee for the cost of leasehold improvements, this is a flow-through arrangement where the lessee does not record any fixed asset associated with the payments. Instead, the lessee is initially paying for the improvements, and those payments are offset shortly thereafter by payments received from the lessor. The Securities and Exchange Commission (SEC) has also noted that when a lessee receives cash under what is judged to be a lease incentive arrangement, the cash inflow should be stated within the operating activities section of the lessee's statement of cash flows as a lease incentive. Also, any payments made for leasehold improvements should be stated within the investing activities section of the statement of cash flows. Related Courses
Accounting for Intangible Assets
Fixed Asset Accounting
Property Management Accounting
Financial structure definition
Installment method definition
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