Crestfield leases office space. On January 3, the company incurs $23,000 to improve the leased office space. These improvements are expected to yield benefits for 5 years. Crestfield has 2 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?

Amortization expense $11,500

To Accumulated Amortization - Leasehold improvements $11,500

(Being the expenses for the first year is recorded)

Explanation:

The journal entry is as follows

Amortization expense $11,500

To Accumulated Amortization - Leasehold improvements $11,500

(Being the expenses for the first year is recorded)

The computation is shown below:

= Incurred expenses : remaining life

= $23,000 : 2

= $11,500

While recording this transaction we debited the amortization expense as the expenses account is increased while at the same time the accumulated amortization should be credited as it decreased the value of the asset