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 |
|
|
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.