[Anonymous]

Can someone answer this for me?

A lessor leases a building to a tenant for 10 years where the tenant spends $500k for leasehold improvements. The lessee amortizes the $500k on their books over the shorter of the lease term or life of the asset.

Does the lessor book anything regarding the leasehold improvements?

Once the lease is over, the improvements revert back to the lessor. Does the lessor need to book the improvements?

Thanks in advance

[Noct]

You cannot record something if there isn't an exchange of value. If the lessor did not exhange any assets for the improvements, they cannot record them.

If the lessor paid for the improvements in part or in full, then they would record and amortize the cost.

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Material: Wiley books

[Anonymous]

Okay. Thanks!

[Author]

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