356 Accumulated Amortization of Leaseholds

Liabilities

Contra Assets

Synopsis

Account 356 is established to record the total Amortization of Leasehold improvements on property rented by the dealership and used in the automobile business.

Debits

Credits

  1. Accumulated amortization of leaseholds improvements sold or otherwise disposed of

 

  1. Monthly provision for amortization

Example 1

Record the monthly provision of $4,275 for the amortization of leasehold improvements.  The monthly expense is pro-rated 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

Example 2

Record the write-off of $514 for a fence that was taken down.  The original cost is $6,328 and the depreciation to date is $5,814.

Journal: General Journal

Entry:

 

Debit

Credit

Account 356

Accumulated Depreciation – Leasehold Improvements

$5,814

 

Account 955

Other Deductions

$514

 

Account 286

Leasehold Improvements

 

$6,328

Comments

A credit balance represents the accumulated amortization of leaseholds and leasehold improvements used in the operation of the business. 

Note:

Professional tax and accounting advice should be obtained regarding the proper method of amortization, which can be applied to Leasehold improvements.