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How many years is the appropriate time for depreciating leasehold improvements?

Leasehold improvements should be depreciated or amortized according to the lessee's normal depreciation policy except that the time period shall be the shorter of: 1) the useful life of the leasehold improvements, or 2) the remaining years of the lease. The remaining years of the lease include the years in the lease renewals that are reasonably assured.

A discussion of your question was done by the Emerging Issues Task Force (EITF) of the Financial Accounting Standards Board (FASB). You can read it by selecting EITF 05-6 at www.fasb.org/st.