Title: Leasehold Improvements Accounting & Amortization, US GAAP
Headings: Leasehold Improvements Accounting and Amortization under US GAAP
Leasehold Improvements Accounting and Amortization under US GAAP
4. Bonus depreciation and tax considerations for qualified LHIs
Common examples of leasehold improvements
Accounting for leasehold improvements
Amortization of leasehold improvements
Example of leasehold improvement amortization
Leasehold improvements and AROs
Tax considerations for qualified leasehold improvements
Qualified improvement property for Section 179
Summary
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Content: Summary
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Leasehold improvements ( LHI) are modifications made to a leased space or leased asset to make it more useful to, or to fit the particular needs of, the tenant. A tenant may want to customize leased office or retail space for their business before moving in. This will likely involve spending money on build-outs or additions to the space (leasehold improvements) to ensure the space meets the tenant’s requirements. Sometimes, the lessor will reimburse the lessee for leasehold improvements. If a reimbursement or tenant improvement allowance is associated with leasehold improvements made by the lessee, it may be a lease incentive. Common examples of leasehold improvements
Not every update made to a space can be considered a leasehold improvement. Some improvements, such as those made to the exterior of the building or those that benefit other tenants or the lessor, are not considered leasehold improvements. The criteria to capitalize and record leasehold improvements also depends on any internal capitalization or materiality policy of the company (i.e., tenant), and should be considered when accounting for leasehold improvements. Here are some common leasehold improvement examples: