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

  1. Monthly provision for Amortization of Leaseholds and leasehold improvements

 

 

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

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

 

 

 

 

 

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.