Improvement of Fixed assets made by lessee without charge to lessor

Lesson Summary-Improvement of fixed assets made by lessee without charge to lessor for Cambodia Tax

Improvement of fixed assets made by lessee without charge to lessor is taxable income for lessor. If lessor rented fixed asset to lessee, lessee made fixed asset improvement without charge from lessor. Amount of fixed asset improvement is taxable income for lessor.

Example 1

ABC Company rented building to XYZ Company. Because building is old, so XYZ Company made building improvement and we expected useful life of building will increase. Assume that improvement cost is $4,000.

Required

Suggest tax treatment for ABC Company.

Answer

Improvement amount of $4,000 is taxable income for tax on income (profit) for ABC Company.