How Do You Account For Leasehold Improvements?
From new flooring to paint, the cost of preparing a leased building for opening day can be high. It would appear that you are fixing up the building for the property owner. However, these purchases are your assets, at least during the term of your lease. So how do you account for these items in your accounting records? Some basic familiarity with your accounting software and accounting principles is necessary to complete this task. With that knowledge, it will be simple if you follow these steps. Create a new asset on your balance sheet called leasehold improvements. Along with this new asset, you will create a contra account called leasehold improvements depreciation to track how much your new asset depreciates. Review your accounting software program’s instructions for adding new accounts. Total all the associated costs for the improvement. For instance, if you replaced the carpet and added a new wall, the cost of the carpet, paint, sheet-rock, lumber and the labor for the installati
