Month End Glossary

Leasehold Improvement

Leasehold improvements refer to changes or enhancements made to a leased property by the tenant to better suit their use or business needs.

Leasehold improvements are modifications or enhancements made to a rental property by the tenant, often with the landlord's approval, to tailor the property to better serve the business or operational requirements of the tenant. These improvements can include installing additional rooms, upgrading the lighting system, or creating specialized workspaces. Examples of leasehold improvements include adding partitions in an office space to create more work areas, upgrading flooring to suit the brand image, or installing custom kitchen fixtures in a restaurant space. These improvements are considered a type of asset from an accounting perspective and are usually amortized over the shorter of the lease term or the life of the improvement.

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