18 CFR § 367.54 - Expenditures on leased property.

---
identifier: "/us/cfr/t18/s367.54"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "18 CFR § 367.54 - Expenditures on leased property."
title_number: 18
title_name: "Conservation of Power and Water Resources"
section_number: "367.54"
section_name: "Expenditures on leased property."
chapter_name: "FEDERAL ENERGY REGULATORY COMMISSION, DEPARTMENT OF ENERGY"
subchapter_number: "U"
subchapter_name: "REGULATIONS UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 2005, FEDERAL POWER ACT AND NATURAL GAS ACT"
part_number: "367"
part_name: "UNIFORM SYSTEM OF ACCOUNTS FOR CENTRALIZED SERVICE COMPANIES SUBJECT TO THE PROVISIONS OF THE PUBLIC UTILITY HOLDING COMPANY ACT OF 2005, FEDERAL POWER ACT AND NATURAL GAS ACT"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "15 U.S.C. 717  16 U.S.C. 791a  and 42 U.S.C. 16451-16463."
regulatory_source: "Order 684, 71 FR 65226, Nov. 7, 2006, unless otherwise noted."
cfr_part: "367"
---


# 367.54 Expenditures on leased property.

(a) The cost of substantial initial improvements (including repairs, rearrangements, additions, and betterments) made to prepare service company property leased to be used for a period of more than one year, and the cost of subsequent substantial additions, replacements, or betterments to the property, must be charged to the service company property account appropriate for the class of property leased. If the service life of the improvements is terminable by action of the lease, the cost, less net salvage, of the improvements must be spread over the life of the lease by charges to account 404, Amortization of limited-term service property (§ 367.4040). However, if the service life is not terminated by action of the lease but by depreciation proper, the cost of the improvements, less net salvage, must be accounted for as depreciable property. The provisions of this paragraph are applicable to property leased under either capital leases or operating leases.

(b) If improvements made to property leased for a period of more than one year are of relatively minor cost, or if the lease is for a period of not more than one year, the cost of the improvements must be charged to the account in which the rent is included, either directly or by amortization.