USA Leasehold Improvement

[Winter2014]

I know you are to include expected renewal lease periods in the useful life of leasehold improvements. However, my question is the current lease is ending and a new lease (for less space) is being entered. Can we extend the useful life of related leasehold improvements under GAAP? Appreciate the feedback.

 

[kirby]

I'm assuming you are in the last year of a lease and a new lease (for less space as you said) is being entered. Yeah you can extend BUT 1) only for the area being retained and 2) you have to see if the new lease term will be longer than the expected life of your old leasehold assets - if so then their life is the max term you can use (hard to estimate and harder to support) then 3) again assuming you are in the last year of the original leasehold you most likely have very little unamortized cost remaining to spread over the new term- so is all this financial gymnastics exercise worth it??