USA Leasehold Improvements - Citations?


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Hello,

I am wondering where I can find definitive definitions for the following in terms of GAAP or FASB:

- Definition for Leasehold Improvements
- Examples

Notably, I'm wondering if the following are considered:

- $1.9M project to add new permanent signage all around a hospital upon taking over the lease
- $1.6M painting for the interior of 5 floors. Normally, painting would never be considered capital, but I've found a lot of "non-gaap" sites that say it could be as the hospital is adding value

Thoughts? Any advice? I'm spending so much time trying to determine if these are capital items under "Leasehold Improvement"

Thanks!
Scott
 
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Hi FooserX

You will not find any FASB pronouncements on basic leasehold improvement accounting. The reason is there are no significant technical issues with leaseholds. It is too basic, somewhat like accounting for receiving cash. Instead, look up the topic in a good Intermediate Accounting textbook, like Kieso. That will give you the GAAP on leasehold improvements.

Good Luck

Kat
 
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Amazing advice - thanks! :)

I don't know if I have my intermediate book, but that really explains why I'm not able to find anything.

It might be too "basic" but some things can be argued, and have million dollar impacts to the F/S

Is there anything on the web that might have this from GAAP?

Thanks Kat.
 
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I did find SFAS 54:

“Leasehold Improvements – Leasehold improvements are additions, alterations,

remodeling, renovations or other changes to a leased property that either extend the useful

life of the existing property or enlarge or improve its capacity and are paid for (financed) by

the lessee.”

This is very straight forward, but leaves out traditional improvements like flooring replacements....painting would definitely not qualify as it's not improving capacity. Yet I See Painting as "customizing tenant space" a lot. Clear as mud when it comes to preparing an Accounting Memo :)
 

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