358 Accumulated Depreciation of IT – Software

Liabilities

Contra Assets

Synopsis

Account 358 is established to record the total Depreciation applied to IT Software purchased or licensed by the dealership for use in the automobile business.

Debits

Credits

  1. The total amount of Depreciation applied to IT computer Software when such Software is sold or otherwise disposed

 

  1. The monthly provision for depreciate IT software

Example 1

Record the monthly provision of $1,215 for depreciation of IT Software.  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

$235

 

Account 091-02

Depreciation – Equipment – Used Vehicles Department

$185

 

Account 091-03

Depreciation – Equipment – Lease & Rental Department

$50

 

Account 091-04

Depreciation – Equipment – Finance & Insurance Department

$100

 

Account 091-05

Depreciation – Equipment – Mechanical Department

$235

 

Account 091-06

Depreciation – Equipment – Body Shop Department

$25

 

Account 091-07

Depreciation – Equipment – Parts & Accessories Department

$200

 

Account 091-09

Depreciation – Equipment – General & Administrative

$185

 

Account 358

Accumulated Depreciation – IT Software

 

$1,215

Example 2

Record the disposition of computer software no longer used.  The original capitalized cost is $4,286 and the software has been fully depreciated.

Journal: General Journal

Entry:

 

Debit

Credit

Account 358

Accumulated Depreciation – IT Software

$4,286

 

Account 288

IT- Software

 

$4,286

Note:

Professional tax and accounting advice should be obtained regarding the proper method of depreciation, which can be applied to IT computer Software.