Leasehold improvements refer to alterations made by a tenant to a property, becoming the landlord's asset after the lease ends. These modifications may qualify for tax deductions.
The purpose of leasehold improvements is to adapt a leased space for the tenant's business, often focusing on interior upgrades like fixtures, equipment, and furniture. Tenants generally cover these costs, sometimes integrated into their rent payments.
To assess the value of leasehold improvements, you'd compute their depreciation using the straight-line method, considering the improvement's cost, installation date, and expected useful life.
Documenting these improvements involves creating a detailed list outlining the alterations and their corresponding expenses. This documentation aids in calculating depreciation expenses for financial models.
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