091 Depreciation - Equipment

Expenses

Fixed

Synopsis

The monthly provision to Depreciate Equipment owned by the dealership and used for the auto business is recorded in Account 091, Depreciation – Equipment. Professional tax and accounting advice should be obtained regarding the proper capitalization of equipment and the related depreciation schedule.

Debits

Credits

Monthly provision for Depreciation of Equipment.
Excess of book value over appraised wholesale value of vehicles recorded in Account 285, Company Vehicles taken out of service and transferred to used vehicle inventories.

Excess of appraised wholesale value over book value of vehicles recorded in Account 285, Company Vehicles taken our of service and transferred to used vehicle inventories.

Example 1

Record the monthly provision of $4,490 for depreciation of machinery and equipment. . The monthly expense is pro-rated between the Mechanical and Body Shop departments as shown in the example below.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 091-05	Depreciation Equipment – Mechanical Department	$2,596
Account 091-06	Depreciation Equipment – Body Shop Department	$1,894
Account 352	Accumulated Depreciation – Machinery & Equipment		$4,490

Example 2

Record the monthly provision of $1,063 for depreciation of parts and accessories.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 091-07	Depreciation – Equipment – Parts & Accessories Department	$1,063
Account 353	Accumulated Depreciation – Parts & Accessories		$1,063

Example 3

Record the monthly provision of $6,445 for depreciation of furniture and fixtures. The monthly expense is pro-rated to each department as shown in the example below.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 091-01	Depreciation – Equipment – New Vehicles Department	$1,325
Account 091-02	Depreciation – Equipment – Used Vehicles Department	$950
Account 091-03	Depreciation – Equipment – Lease & Rental Department	$675
Account 091-04	Depreciation – Equipment – Finance & Insurance Department	$425
Account 091-05	Depreciation – Equipment – Mechanical Department	$1,185
Account 091-06	Depreciation – Equipment – Body Shop Department	$275
Account 091-07	Depreciation – Equipment – Parts & Accessories Department	$350
Account 091-09	Depreciation – Equipment – General & Administrative	$1,260
Account 354	Accumulated Depreciation – Furniture & Fixtures		$6,445

Example 4

Record the monthly provision of $2,370 for depreciation of company vehicles. The monthly expense is pro-rated to between the Mechanical Department and the Parts and Accessories Department as shown in the example below.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 091-05	Depreciation – Equipment – Mechanical Department	$875
Account 091-07	Depreciation – Equipment – Parts & Accessories Department	$1,495
Account 355	Accumulated Depreciation – Company Vehicles		$2,370

Distribution of Expenses

	Departmental Distribution
091 Depreciation - Equipment	New Veh.	Used Veh.	Lease & Rental	Mechanical	Body Shop	Parts & Access.	Gen & Admin.
	01	02	03	05	06	07	09
Machinery and shop equipment				Equipment assigned	Equipment assigned
Parts and accessories equipment						Total expense
Company vehicles in Account 285, Company Vehicles	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned	Vehicles assigned
Furniture and fixtures	Equipment assigned	Equipment assigned	Equipment assigned	Equipment assigned	Equipment assigned	Equipment assigned	Equipment assigned
Excess of book value over appraised wholesale value of a parts truck transferred to the used truck inventory for sale						Total expense

Comments

When only one Department has equipment subject to depreciation such as the air compressor, then the monthly provision to depreciate the air compressor should be charged to the Service Department. If two (2) or more departments share equipment such as the phone system, then the monthly provision should be pro-rated to each department based on usage.

Departmental Distribution