I was sure that I knew the answer to this question, but was told by a CPA that I was wrong. Please help:
Situation 1: Developer builds commercial building which is divided into multiple units. Developer is willing to build offices in each "to suit". Client enters into lease with Developer for one of the units, and Developer pays to have offices built to Client's requests. Client makes, and expenses, the entire amount of the lease payments. There is nothing in the lease to remotely suggest that the Client may claim the value of the construction of the offices as a lease-hold improvement on their balance sheet, must less to be depreciated by the Client.
Question 1: May the Client unilaterally decide to list the value of the offices as a lease-hold improvement on their balance sheet, and then depreciate this asset?
Situation 2: Client never lists the value on their balance sheet (and never depreciates). Client sells all of their assets to NewCo. NewCo sub-leases the unit, and continues making, and expensing, lease payments.
Question 2: May NewCo unilaterally decide to list the value of the offices as a lease-hold improvement on their balance sheet, and then depreciate this asset?