347 Accumulated Depreciation - Lease and Rental Units

Liabilities

Contra Assets

Synopsis

Account 347 is established to record the Accumulated Depreciation of Lease and Rental Units currently in service. These Lease and Rental units are assets owned by the dealership.

Debits

Credits

Accumulated depreciation of Lease and Rental units sold or otherwise disposed of

Monthly provision for depreciation

Example 1

Record the monthly depreciation of $3,600 on rental units.

Journal: Standard Entries Journal

Entry:		Debit	Credit
Account 732	Direct Cost – Amortization	$3,600
Account 347	Accumulated Depreciation – Lease & Rental Units		$3,600

Example 2

Record the transfer of a lease unit to used car inventory at the appraised wholesale value of $14,800. The initial cost is $24,000 and the depreciation is $8,800 with a $400 direct cost amortization.

Journal: General Journal

Entry:		Debit	Credit
Account 240	Inventory – Used Cars	$14,800
Account 347	Accumulated Depreciation – Lease & Rental Units	$8,800
Account 712	Direct Cost – Amortization	$400
Account 277	Lease & Rental Vehicles		$24,000

Example 3

Record the sale of a lease unit for $15,200 at the end of the lease. The initial cost is $24,000 and the depreciation is $8,800.

Journal: Cash Sales

Entry:		Debit	Credit
Account 201	Cash in Bank	$15,200
Account 347	Accumulated Depreciation – Lease & Rental Units	$8,800
Account 710	Cost of Sales of Disposed Vehicles	$15,200
Account 277	Lease & Rental Vehicles		$24,000
Account 510	Selling Price of Disposed Vehicle		$15,200

Comments

A credit balance represents the accumulated depreciation of lease and rental units.

Note:

Professional tax and accounting advice should be obtained regarding the proper handling and depreciation of Lease and Rental Units.