Northlake Nordic Centre Inc. bought its groomer (Equipment) on 1 November for 96,000. Residual value is 6,000 and useful life six years; straight-line. Record the amortization adjustment at the 31 December year end.
Northlake Nordic Centre Inc. bought its groomer (Equipment) on 1 November for 96,000. Residual value is 6,000 and useful life six years; straight-line. Record the amortization adjustment at the 31 December year end.
Answer
Dr Amortization Expense 2500; Cr Accumulated Amortization – Equipment 2500
Accounts - Amortization Expense - Accumulated Amortization – Equipment - Equipment - Cash - Repairs Expense (96,000 − 6,000) ÷ 6 = 15,000 a year; two months owned: 15,000 × 2/12 = **2,500**. **Amortization Expense** (debit) and **Accumulated Amortization – Equipment** (contra asset — credit). The trap is crediting **Equipment**: the asset stays at cost so that the balance sheet can show cost, accumulated amortization and carrying amount separately. Cash never moves in an adjustment; Repairs Expense is maintenance, not wear.
Hermanson Vol 1 ch 3 (depreciation as an adjustment); Lyryx Intermediate FA Vol 1 §10.6 (ASPE terminology); Dauderis & Annand §3.2 (concept map D8); verified-facts.md V6 (s.3061 uses “amortization”)