081 Amortization - Leaseholds
Expenses
Fixed
Synopsis
The monthly provision to Amortize Leaseholds and leasehold improvements is recorded in Account 081, Amortization – Leaseholds. Professional tax and accounting advice should be obtained regarding the proper handling of leaseholds and leasehold improvements and the related amortization schedules.
Debits |
Credits |
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Example 1
Record the monthly provision of $4,275 for the amortization of leasehold improvements. The $4,275 is distributed to each department as shown in the example below.
Journal: Standard Entries Journal
Entry: |
|
Debit |
Credit |
Account 081-01 |
Amortization – Leaseholds – New Vehicles Department |
$898 |
|
Account 081-02 |
Amortization – Leaseholds – Used Vehicles Department |
$641 |
|
Account 081-03 |
Amortization – Leaseholds – Lease & Rental Department |
$86 |
|
Account 081-05 |
Amortization – Leaseholds – Mechanical Department |
$812 |
|
Account 081-06 |
Amortization – Leaseholds – Body Shop Department |
$427 |
|
Account 081-07 |
Amortization – Leaseholds – Parts & Accessories Department |
$770 |
|
Account 081-09 |
Amortization – Leaseholds – General & Administrative |
$641 |
|
Account 356 |
Accumulated Amortization – Leasehold Improvements |
|
$4,275 |
Distribution of Expenses
|
Departmental Distribution |
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081 Amortization Leaseholds |
New Veh. |
Used Veh. |
Lease & Rental |
Mechanical |
Body Shop |
Parts & Access. |
Gen & Admin. |
|
01 |
02 |
03 |
05 |
06 |
07 |
09 |
Leaseholds and improvements for separate used car lot |
|
Total expense |
|
|
|
|
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Leaseholds and improvements for several or all departments |
Relative value factor |
Relative value factor |
Relative value factor |
Relative value factor |
Relative value factor |
Relative value factor |
Relative value factor |
Comments
When a leasehold improvement is done for the benefit of a single Department, such as an overhead cover for the service write-up driveway, then the benefiting Department should be charged with the monthly provision of the Leasehold Amortization. If more than one department benefits, then the monthly provision should be pro-rated to each respective Department, by using the relative value factor.