journal entries for long lived assets
DESCRIPTION
Examples of journal entries for long lived assets.TRANSCRIPT
Reporting and Analyzing Long-Lived Assets
Journal Entries for sale of plant assets:
Transaction DescriptionJournal Entry
Account Title Debit CreditAdjusting Entry to bring accumulated depreciation to current date
Depreciation Expense XXXAccumulated Depreciation-asset title XXX
To record the sale of an asset with a gain
Accumulated Depreciation—asset title XXXCash XXX
Asset Title XXXGain on Disposal XXX
To record the sale of an asset with a loss
Accumulated Depreciation-asset title XXXCash XXXLoss on Disposal XXX
Asset Title XXX
To record the retirement of an asset where the asset is fully depreciated
Accumulated Depreciation—asset title XXXAsset Title XXX
To record the retirement of an asset where there is either a salvage value or the asset has not been fully depreciated
Accumulated Depreciation—asset title XXXLoss on disposal XXX
Asset Title XXXNote: “Asset title” should be replaced with the title of the asset. Depreciation must always be brought up to current before an asset is disposed of during the year.
Journal Entries for Purchase of Intangible Assets:
Transaction DescriptionJournal Entry
Account Title Debit Credit
To record the purchase of a patentPatent XXX
Cash XXX
To record the purchase of a FranchiseFranchise XXX
Cash XXX
To record the purchase of a CopyrightCopyright XXX
Cash XXX
To record the purchase of a Trademark or Trade name
Trademark XXXCash XXX
To record research and development cost
Research and Development Expense XXXCash XXX
MJC Revised 10-2011 Page 1
Reporting and Analyzing Long-Lived Assets
Journal Entries for Purchase of Intangible Assets Continued:
Transaction DescriptionJournal Entry
Account Title Debit Credit
To record the acquisition of goodwillGoodwill XXX
Cash XXXResearch and development cost are to be treated not as an intangible asset but only as an expense.
Journal Entries for Amortization of Intangible Assets:
Transaction DescriptionJournal Entry
Account Title Debit CreditTo record the amortization of a patent Amortization Expense—Patent XXX
Patent XXX
To record the amortization of a Franchise
Amortization Expense—Franchise XXXFranchise XXX
To record the amortization of a Copyright
Amortization Expense—Copyright XXXCopyright XXX
To record the amortization of a Trademark or Trade Name
Amortization Expense—Trademark XXXTrademark XXX
To record impairment of Goodwill Loss Impairment—Goodwill XXXGoodwill XXX
Note: Research and development costs are an expense; therefore, those costs cannot be amortized. Goodwill will only be decreased for any impairment to its market value. Goodwill will never be increased in value due to an increase in its market value.
MJC Revised 10-2011 Page 2