Code of Federal Regulations Title 49. Transportation 49 CFR § 1201.2-18 2–18 [1201.2–18] Leased property improvements and retirements

The cost to lessee of structures, facilities, additions and betterments on leased property and for retirement of property the cost of which is included in account 732 Improvements on leased property, shall be accounted for in conformity with the principles in the instructions for property owned. When lessor's property is retired and replaced and lessee is not obligated to reimburse the lessor for the retired property other than through the replacement, the lessee shall (1) charge the cost of the replacement to account 732, Improvements on leased property, (2) discontinue accruing depreciation for lessor's retired property, and (3) when recording final settlement with the lessor, consider jointly the amount accrued in account 772, Accrued liability;  Leased property, for lessor's retired property and the respective amounts for the replacement included in accounts 732, Improvements on leased property, and 733, Accumulated depreciation;  Improvements on leased property. When lessee is obligated to reimburse the lessor currently or at the termination of the lease for property retired other than through replacement, the lessee shall include the amount of the obligation in the appropriate liability account. The lessee shall furnish the lessor such information as is required to enable the lessor to perform necessary accounting. The accounting by the lessee and the lessor shall be consistent with contractual arrangements.