What type of improvement is described by the upgrade of carpet in a leased building?

The upgrade of carpet in a leased building is classified as a leasehold improvement. This term refers to modifications made to rental premises to enhance their value or usability. Leasehold improvements are commonly the property of the landlord but are typically made at the expense of the tenant.

In this case, installing new carpet significantly improves the aesthetic and functional quality of the leased space, contributing to its overall value. These improvements are considered valuable enhancements that can potentially benefit both the tenant and landlord, depending on the lease terms. When the lease expires, any remaining value of the leasehold improvement may benefit the landlord or might be removed by the tenant, depending on their agreement.

The other options reflect different property classifications: fixed assets refer to long-term tangible assets owned by a business, trade fixtures are items installed by a tenant that can be removed at the end of the lease, and current assets are short-term assets easily converted to cash. These classifications do not accurately capture the nature of improvements made to leased property, which appropriately fits the category of leasehold improvements.