We took an office under the lease and we installed the new window blinds.

How do we treat the expenses for the window blinds?

Do we add it to the ROU asset? Or directly in profit or loss as an expense?


These window blinds are in fact a leasehold improvement and yes, you can capitalize them as a separate item of PPE, not as a part of ROU asset.

You would do the same even if the lease is short-term and you apply the accounting exemption (i.e. you do not account for ROU asset, but all the lease payments go straight in profit or loss) – you can still treat these improvements as PPE if they meet that definition.

Just be careful about the depreciation of your leasehold improvement.

You should depreciate it over their useful life or the lease term, whichever is shorter.

That is logical, because if the blinds will be usable for 8 years, but your lease term is 3 years and then you leave, you will stop using these blinds (I assume you will not take them with you since they are fixed to the windows).