Reimbursement of leasehold improvements
Posted: 22 Apr 2024, 18:22
Dear Members,
On the topic of reimbursement of leasehold improvements, when I refer the knowledge base then it is mentioned there that if the reimbursement is not classified as a lease incentive, it is treated as a reduction of their cost. My question is that should we even be recognizing the asset in the books of the lessee in the first place as for the lack of lessee's control over the leasehold improvement to later reduce it by the reimbursement amount? Shouldn't this simply be treated by recognizing a financial asset against the expected amount to be reimbursed? Thanks.
On the topic of reimbursement of leasehold improvements, when I refer the knowledge base then it is mentioned there that if the reimbursement is not classified as a lease incentive, it is treated as a reduction of their cost. My question is that should we even be recognizing the asset in the books of the lessee in the first place as for the lack of lessee's control over the leasehold improvement to later reduce it by the reimbursement amount? Shouldn't this simply be treated by recognizing a financial asset against the expected amount to be reimbursed? Thanks.