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Is depreciation expense used to allocate historical cost over the life of an asset?
Wiki User
∙ 10y ago
Yes, depreciation account is used to allocate the cost of asset over the life of asset to income statement of the fiscal year where asset utilized to earn revenue.
Wiki User
∙ 10y ago
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What are the reasons for providing depreciation?
Main reason for prodiving depreciation is to allocate the part of cost of fixed assets to specific fiscal year to income statement as expense in which year fixed asset is used to generate revenue for business.
What is entry for depreciation?
[Debit] Depreciation expense[credit] fixed asset.
What is the journal entry for depreciation expense?
Debit depreciation expenseCredit fixed asset
The journal entry to record depreciation expense consists of a credit to Accumulated Depreciation and a debit to the asset being depreciated?
Debit is to depreciation expense.
The periodic transfer of the cost of an intangible asset to expense is referred to as?
depreciation
Is depreciation expense an asset or liability?
Depreciation expense is neither an asset or liability. It is an expense.
Is recording an annual depreciation expense an accrued expense?
Yes. Annual depreciation is the method by which we allocate the cost of a tangible asset over the course of its useful life independent of the cash flows associated with it. As a result, it is considered an accrued expense.
Do deprecations go on an income statement?
Yes depreciation is an expense and it is used to allocate the fixed portion of fixed asset cost to specific fiscal year in which that asset is used.
Is the deprecation expense on the income statement a non cash expense?
Correct. When a long-term tangible asset is purchased (e.g., property, plants and equipment), the Matching Principle under GAAP requires expenses to be systematically matched with the periods in which the corresponding revenues are generated. All depreciation expense does is systematically expense the asset over the period of its useful life. The useful life of the asset has nothing to do with when cash was actually paid for the asset.
What are the reasons for providing depreciation?
Main reason for prodiving depreciation is to allocate the part of cost of fixed assets to specific fiscal year to income statement as expense in which year fixed asset is used to generate revenue for business.
What is entry for depreciation?
[Debit] Depreciation expense[credit] fixed asset.
What is the purpose of depreciation expense and accumulated depreciation?
Depreciation expense reduce the cost of asset through income statement for the useful life of asset and accumulated depreciation account is contra account for asset account in balance sheet to show the total amount of depreciation charged.
How does depreciation expense on the income statement relate to accumulated depreciation on the balance sheet?
Depreciation expense on the income statement represents the portion of the asset's cost that is allocated as an expense during the reporting period. Accumulated depreciation on the balance sheet is a contra-asset account that reduces the asset's original cost by the total amount of depreciation expense recognized over its useful life. Thus, depreciation expense increases the accumulated depreciation balance on the balance sheet.
What is the journal entry for depreciation expense?
Debit depreciation expenseCredit fixed asset
The journal entry to record depreciation expense consists of a credit to Accumulated Depreciation and a debit to the asset being depreciated?
Debit is to depreciation expense.
Is depreciation recorded by debiting the accumulated depreciation account and crediting the depreciation expense account?
Method 1 1 - [Debit] Depreciation Expense xxxx [Credit] Asset account xxxx Method 2 1 - [Debit] Depreciation Expense xxxx [Credit] Accumulated Depreciation xxxx 2 - [Debit] Accumulated Depreciation xxxx [Credit] Asset Account xxxx
Accumulated depreciation and depreciation expense?
Using accumulated depreciation and depreciation expense is a way that businesses can realize the true value of assets. A piece of equipment, for example, is devalued every year by the process of amortizing the asset. This in turn is recorded as depreciation and depreciation expense.
