A restaurant owner signs a lease for a new space. The lease term is 10 years with an option to renew. He spends $50,000 for remodeling. As per lease agreement, the Lessor also pays $30,000 directly to the Contractor for remodeling. Total cost of improvement is $80,000. How shoudl the Lessee book the asset in his balance sheet and also report in his tax return? Should he book $50,0000 or $80,000 as the leasehold improvement in his book? If the Leasehold Improvement is $80,000, what should be the offset credit entries.
- posted
10 years ago