286 – Leaseholds

Fixed Assets

 

Synopsis

Account 286

Debits

Credits

  1. The purchase price of a lease.

  2. The cost of improvements made on leased property.

  3. The cost of existing improvements acquired on leased property.

  4. The premium paid for a lease.

  1. The cost of leaseholds and improvements sold or abandoned.

 

 

Remarks:

Leased security deposits should not be recorded in this account.  They should be entered in Prepaid Expenses (Account 269D).

 

All leaseholds should be listed in detail on a fixed asset inventory and depreciation record.  The accumulated total in the cost column should agree with the balance in this account each month-end.

 

Repairs and maintenance costs which ordinarily do not add to the value of the leaseholds should be expensed as they occur.

 

Leasehold improvements are normally construed to mean those improvements of a permanent nature that add value and/or life to the property.

 

When leaseholds are sold, the cost should be credited to this account.  Accumulated amortization for the leasehold sold should be debited to Amortization of Leaseholds (Account 356).  Any gain on the sale should be credited to Additions to Income – Other (Account 805).  Any loss on the sale should be debited to Deductions to Income – Other (Account 855).

Note: