Leasehold definition
/What is a Leasehold?
A leasehold is a designation that is assigned to an asset being leased. Under a lease arrangement, the lessee gains the use of an asset that is owned by the lessor for a certain period of time, in exchange for a series of payments.
Accounting for a Leasehold
The leasehold designation appears in the accounting records of the lessee, and is most commonly seen as a fixed asset account called "Leasehold Improvements". These improvements are capital expenditures applied to a leased asset, such as building space. The lessee amortizes leasehold improvements over the shorter of their useful life or the life of the lease.
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Presentation of a Leasehold
For presentation purposes, a leasehold asset is usually consolidated with the other fixed asset accounts of a business, so that only a single fixed assets line item is presented on its balance sheet. The ending balance in the leasehold asset account is usually considered too immaterial to be worth presenting separately.