Listen to a Business English Dialogue About Leasehold improvements
Elena: Hi Melody, have you heard about leasehold improvements in business and finance?
Melody: Yes, they’re alterations or enhancements made to leased property by the tenant, typically to customize the space or meet specific needs.
Elena: That’s right. Leasehold improvements can include things like installing fixtures, upgrading infrastructure, or renovating interior spaces.
Melody: How do leasehold improvements affect accounting and financial reporting?
Elena: Leasehold improvements are typically capitalized and amortized over the term of the lease, which means their costs are spread out over time rather than expensed all at once.
Melody: Are there any tax implications for leasehold improvements?
Elena: Yes, businesses can often deduct the costs of leasehold improvements as an expense over time, which can help reduce their taxable income.
Melody: Can leasehold improvements be removed or reversed at the end of the lease term?
Elena: Generally, leasehold improvements become the property of the landlord at the end of the lease unless otherwise negotiated, so tenants may need to negotiate with the landlord or leave the improvements behind.
Melody: Thanks for explaining, Elena. Leasehold improvements seem like an important aspect of leasing commercial space.
Elena: Definitely, Melody. They can add value to the leased property and improve the functionality for the tenant’s operations.