How many years is the appropriate time for depreciating leasehold improvements?
Leasehold improvements should be depreciated or amortized according to the lessee’s normal depreciation policy except that the time period shall be the shorter of: 1) the useful life of the leasehold improvements, or 2) the remaining years of the lease. The remaining years of the lease include the years in the lease renewals that are reasonably assured.
A discussion of your question was done by the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB). You can read it by selecting EITF 05-6 at www.fasb.org/st.
Learn more about Depreciation.
About the Author: Harold Averkamp (CPA) has worked as an accountant, consultant, and university accounting instructor for more than 25 years.He is the author of the 2010 Master Accounting Download Package which has been praised for it's ability to simplify accounting in a way that anybody can understand.
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My husband is one of 4 partners in an LLC. Two of the partners are leaving the business and selling their interest to the remaining two. Since exactly 50% of the original owners are leaving, do we have to do a partnership return for the months of operation together and then another one for the balance of the year? Thanks.
pls. having problem classifying/preparing leasehold into fixed assets during audit work period from 2007-2009.