1.. Two methods for your accounting treatment in you case, either is acceptable;
a. Dr. Cash 100K
Cr. Leasehold improvment 100K
The lease inducement is used to net against the cost of leasehold improvement. Your leasehold improvement is now 50k which is the basis for depreciation.
This method would be direct.
b. Set up the "Lease inducements" for the 100K received and amortized over the lease term.
2. Tax treatment is different:
For tax purpose, lease inducements are fully taxable in the year they are received.
If the taxpayer wants to use the inducements received to net against the leasehold, an election must be send to CRA which is due on the same date as the income tax return.
a. Dr. Cash 100K
Cr. Leasehold improvment 100K
The lease inducement is used to net against the cost of leasehold improvement. Your leasehold improvement is now 50k which is the basis for depreciation.
This method would be direct.
b. Set up the "Lease inducements" for the 100K received and amortized over the lease term.
2. Tax treatment is different:
For tax purpose, lease inducements are fully taxable in the year they are received.
If the taxpayer wants to use the inducements received to net against the leasehold, an election must be send to CRA which is due on the same date as the income tax return.