Question: A lessee is evaluating whether a lease term is a major part of the remaining life of an asset in order to determine the proper

A lessee is evaluating whether a lease term is a major part of the remaining life of an asset in order to determine the proper lease classification. The lessee leases office space through a lease with a 10 -year term. The lease has a renewal option for an additional 5 years at a rental price that is adjusted to market at time of renewal. The office building has a remaining useful life of 20 years from the commencement of the lease. The lessee plans to make a significant investment in leasehold improvements (useful life of 15 years) at the commencement of the lease. Based on this information only, how would the lessee classify this lease?

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