083 Depreciation – Buildings and Improvements

Expenses

Fixed

Synopsis

Account 083, Depreciation – Buildings and Improvements is established to record the monthly provision to Depreciate Building and Improvements used in the dealership’s auto business.

Debits

Credits

  1. Monthly provision for Depreciation of Buildings and Improvements

 

 

Example 1

Record the monthly depreciation expense of $10,150 for the building and improvements.  The $10,150 is distributed to each department as shown in the example below.

Journal: Standard Entries Journal

Entry:

 

Debit

Credit

Account 083-01

Depreciation – Buildings & Improvements – New Vehicles Department

$2,132

 

Account 083-02

Depreciation – Buildings & Improvements –Used Vehicle Department

$1,522

 

Account 083-03

Depreciation – Buildings & Improvements – Lease & Rental Department

$203

 

Account 083-05

Depreciation – Buildings & Improvements – Mechanical Department

$1,929

 

Account 083-06

Depreciation – Buildings & Improvements – Body Shop Department

$1,015

 

Account 083-07

Depreciation – Buildings & Improvements – Parts & Accessories Department

$1,827

 

Account 083-09

Depreciation – Buildings & Improvements – General & Administrative Department

$1,522

 

Account 351

Accumulated Depreciation – Building & Improvements (Auto Business Only)

 

$10,150

Distribution of Expenses

 

Departmental Distribution

083 Depreciation –

Buildings and Improvements

New Veh.

Used Veh.

Lease & Rental

Mechanical

Body Shop

Parts & Access.

Gen & Admin.

 

01

02

03

05

06

07

09

Main building which all departments occupy

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Relative value factor

Separate body shop

 

 

 

 

Total expense

 

 

Separate used car office building

 

Total expense

 

 

 

 

 

Comments

The monthly provision to Depreciate Buildings and Improvements should be pro-rated to each Department using the relative value factor method.  The exception is when a Department occupies a completely separate facility such as an off-site used vehicle lot.  For these exceptions, the entire monthly depreciation is charged to the benefiting Department.