USA Leasehold Improvements

[Nicole Trickle]

We are terminating our facility lease early. Normally, we would write off the remaining book value of our leasehold improvements (as they are not fully amortized yet due to the early termination); however, there is a possibility that we would sublease the facility. My assumption would be that we would still write off the leasehold improvements, as I don't think we can continue to amortize leasehold improvements as we are not the true landlords even if we would sublease. However, I can't find any standards that specifically handle leasehold improvements and subleasing, in order to corroborate my assumption. Can anyone provide any guidance on this issue?

 

[kirby]

The only thing you know for sure is the early termination. The sublease is just a "possibility' right now. So principle of conservatism guides you write off the remaining leasehold improvements at termination.

 

[bklynboy]

You also need to consider if an Asset Retirement Obligation needs to be accrued for the purpose of putting the facility back to the condition agreed in lease.