Mike installed new fencing around the perimeter of the property. The installation was completed on 6/28/2017...
Mike installed new fencing around the perimeter of the property. The installation was completed on 6/28/2017 at a cost of $80,000. Mike estimates the useful life of the fencing to be 20 years. Mike uses straight-line depreciation. What is the adjusting entry?
Homework Answers
While Accounting for Land Improvements(Items that add Functionality to the Land), items that have a Depreciable Life are accounted separately from Land A/c. They are depreciated over their useful life whereas Land is non Depreciable Asset.
Adjusting Entries would be:
Accounts Dr Cr
Land Improvement A/c(Fencing) Dr $80000
To Cash A/c $80000
(Being Fencing Cost incurred)
Also there would be Depreciation each year, whose entry would be
Depreciation A/c Dr $4000
To Land Improvements A/c(Fencing) $4000
(or Accumulated Depreciation A/c)
(being depreciation expenses booked)
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