Question
You note that Leasehold Improvements have not been depreciated for this year. DeeDee started to lease some new retail space in 2017 and added shelving
You note that Leasehold Improvements have not been depreciated for this year. DeeDee started to lease some new retail space in 2017 and added shelving and fixtures to this leased space. Based on your review of invoices, the previous accountant capitalized the cost of fixtures but did not capitalize the shipping and installation costs of $5,701. These costs were expensed and recorded as a miscellaneous administrative expense. DeeDee has decided to use double declining balance (DDB) depreciation for this item and to take a full year of depreciation in the year of acquisition. The leasehold improvements have a useful life of 15 years with a salvage value of $10,000.
a) How do I capitalize the shipping and installation costs of $5,701
b) How would I reverse it to get it out of Miscellaneous Administrative Expense?
c) What would be the depreciation? (Using the DDB)
DeeDee Double Entry, Incorporated End of Period Worksheet For the Year Ended December 31, 2017 Unadjusted Account Title Trial Balance Adjustments CR CR Cash 240,300 Accounts Receivable 925,000 Allowance for Doubtful Accounts 49.000 Interest Receivable Merchandise Inventory 187,500 9000 Prepaid Insurance Prepaid Rent Office Supplie 7800 Note Receivable 75.000 Available for Sale Securities 380,000 4250.000 Office Building Accumulated Depreciation Office Building 1.650.000 Storage Building Accumulated Depreciation Storage Building Land Leasehold lmprovements 190,000 Accumulated Depreciation Leasehold lmprovements 125.000 Office Equipment 42.000 250.000 Paten usted Trial Balance DR CRStep by Step Solution
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