Northlake Nordic Centre Inc. bought a snowcat on 1 January for 150,000; residual value 15,000; useful life 5 years. Record the first year’s amortization at 31 December, straight-line.
Northlake Nordic Centre Inc. bought a snowcat on 1 January for 150,000; residual value 15,000; useful life 5 years. Record the first year’s amortization at 31 December, straight-line.
Answer
Dr Amortization Expense 27000; Cr Accumulated Amortization – Equipment 27000
Accounts - Amortization Expense - Accumulated Amortization – Equipment - Equipment - Cash - Repairs Expense (150,000 − 15,000) ÷ 5 = **27,000**: **Amortization Expense** (debit) and the contra **Accumulated Amortization – Equipment** (credit). Two traps: crediting **Equipment** itself (the cost stays at 150,000 until disposal), and 30,000 — cost ÷ 5, forgetting the residual value. No cash moves at an adjusting entry.
Hermanson Vol 1 ch 10 (straight-line and units-of-production; demonstration B — shape adapted); Lyryx Intermediate FA Vol 1 §10.2; Dauderis & Annand §8.2 (concept map K4–K5)