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When allocating depreciation, the two accounts affected will be an expense account - depreciation and a negative asset/contra-asset - accumulated depreciation.
The journal entry would be:
Dr Depreciation xxxx
Cr Accumulated Depreciation xxxx
This effectively raises the expense and decreases your asset.
In the general ledger the depreciation account will be debited and the accumulated depreciation will be credited.
Wiki User
∙ 13y ago
The double effect of depreciation refers to the impact it has on a company's financial statements. Firstly, depreciation reduces the value of a company's fixed assets over time, which is reflected in the balance sheet. Secondly, it reduces the company's reported profits on the income statement by allocating the cost of the asset over its useful life. These two effects work together to accurately represent the value of the asset and the profitability of the company over time.
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What effect does depreciation expense have on net income and cash flow?
Depreciation Expense reduces net income and has no effect on cash flow.
Accelerated depreciation method?
Accelerated depreciation is method in which double rate for depreciation is used as compare to straight line method.
How do you double entry on depreciation?
DR. DEPRECIATION EXPENSE X CR. ASSET X At the end of the year Depreciation is charged to the Income Statement.
Where does accumulated depreciation go on a multiple step income statement?
accumulated depreciation is a part of financial statement while its counteract or effect is recorded into income statement as a Depreciation Expense.
An asset costs 33000 it has an expected useful life of 5 years and an expected salvage value of 3000 what is the depreciation for the first year of assets life using the double declining method?
The double declining balance method depreciates the asset at twice the straight-line rate. To calculate the annual depreciation expense, you first find the straight-line depreciation rate by dividing the depreciable cost (original cost - salvage value) by the useful life. In this case, the depreciable cost is $33,000 - $3,000 = $30,000. The straight-line rate is $30,000 / 5 years = $6,000 per year. Double that rate to get the double declining rate of $12,000 per year. Therefore, the depreciation for the first year would be $12,000.
What is the amount of depreciation using the double declinging method for the second year of use for equipment costing 9000 with an estimated residual value of 600 and as estimated life of three year?
Depreciation for 1st year = 6000 Depreciation for 2nd year = 2000 Depreciation for 3rd year = 400
Is depreciation included as a cash flow in capital budgeting?
No depreciation is not included as depreciation is allocation of part of assets cost to income statement while in capital budgeting, full cost of asset is already included so if depreciation will also be included then there would be double counting of same asset.
Is depreciation on equipment fixed or variable?
Depreciation is a fixed cost because variable cost is that cost which change with the change in the production units but it doesn't put any effect on depreciation as depreciation of the equipment will remain same no matter you produce maximum number of units or produce no unit in fiscal year.
Is depreciation beneficial if income is non taxable If not is it appropriate to remove it from the financial statements?
Depreciation doesnot have any effect when income is non taxable but even then depreciation is shown to reduce the cost of asset and allocate it to income statement of fiscal year.
Is Residual value a incorporated in the initial calculations for double-declining-balance depreciation?
true!
Which method almost always produces the most depreciation in the first year?
Double declining balance.
What is unabsorbed depreciation?
The amount of Depreciation allowance of any year which cannot be absorbed due to nonavailability of profits or gains chargeable for that year of such profits or gains being less than the allowance then the allowance or part of the allowance to which effect has not been given is treated as unabsorbed depreciation.
