Load Period Lease

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Such incentives require specific accounting treatment under Accounting Principles Generally Accepted in the United States (U.S.GAAP). They generally include a rent-free period, a reduced rent period, or cash payments from the landlord to cover specific costs.
If the tenant pays for leasehold improvements, the capital expenditure is recorded as an asset on the tenant's balance sheet. Then the expense is recorded on income statements as amortization over either the life of the lease or the useful life of the asset, whichever is shorter.
Leasehold improvements generally revert to the ownership of the landlord upon termination of the lease, unless the tenant can remove them without damaging the leased property. When you pay for leasehold improvements, capitalize them if they exceed the corporate capitalization limit.
A landlord may pay for commercial leasehold improvements through a tenant improvement allowance (TIA). In this case, the landlord allows a set budget for improvements, typically $5 to $15 per square foot, and oversees the project. Meanwhile, the tenant controls the renovation process, which may be time-consuming.
Generally, the party who pays for and owns the improvements may take the depreciation deductions. When landlords construct and pay for improvements, they own and depreciate the improvements, and there are no tax consequences of the tenant.
Leasehold improvements are considered business assets because they're attached to real property. They can, therefore, be depreciated. You can treat them like other assets in every way, but you can't sell them unless you sell the whole building.
Compile the total cost of the lease for the entire lease period. Divide this amount by the total number of periods covered by the lease, including all free occupancy months.
Compile the total cost of the lease for the entire lease period. Divide this amount by the total number of periods covered by the lease, including all free occupancy months.
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