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Depreciation expense is part of income statement all other expenses are also part of income statement and that's the main purpose of preparing income statement to show all incomes and expenses.
Wiki User
∙ 9y ago
Wiki User
∙ 9y agoAccumulated depreciation is a contra T-account to some asset. On the balance sheet it is subtracted from this asset.
Example
The company buys a machine for 100 cash at the beginning of the year. The machine has no residual value, and an economic lifetime of 5 years.
purchase
Debit to machine of 100, credit to cash of 100
yearly depreciation (assuming straight line method)
Debit to depreciation expense 20, credit to accumulated depreciation machine of 20
At the end of the first year
Machine has a debit balance of 100, accumulated depreciation machine has a credit balance of 20. Depreciation expense has a debit balance of 20.
Presentation on the balance sheet
Machine, cost: 100
Accumulated depreciation machine: -20
Machine, net: 80
At the end of the second year
Machine has a debit balance of 100, accumulated depreciation machine has a credit balance of 40. Depreciation expense has a debit balance of 20.
Presentation on the balance sheet
Machine, cost: 100
Accumulated depreciation machine: -40
Machine, net: 60
Etcetera
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What event makes the accumulated depreciation account go up Are these debits or credits to accumulated depreciation?
Depreciating assets over time causes the Accumulated Depreciation to go up with a credit entry. The debit is to depreciation expense.
What is the entry for accumulated depreciation?
Debit depreciation accountCredit accumulated depreciation
How are accumulated depreciation and depreciation related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
How are accumulated depreciation and depreciation expensese related?
Accumulated depreciation and depreciation are related with each other as depreciation is annual expense while accumulated depreciation is the sum of all annual depreciation expenses.
What is accumulated depreciation?
The accumulated deprecation is the all the depreciation amounts should be the accumulated depreciation.
What is the journal entry accumulated depreciation?
[Debit] Depreciation account [Credit] Accumulated depreciation
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.
How do you record annual depreciation and accumulated depreciation?
[Debit] Depreciation expense[Credit] Accumulated depreciationAfter that depreciation is shown as part of income statement while accumulated depreciation goes to balance sheet.
Is it customary for the depreciation expense account and the accumulated depreciation account to be equal?
No. Accumulated depreciation is depreciation accumulated every year and it will only increase and won't decrease. Depreciation expenses is incurred every year.
What is the normal balance of accumulated depreciation?
the normal balance of accumulated depreciation is "credit"
Why accumulated depreciation exceed depreciation expense?
Depreciation expenses is for one specific fiscal year while accumulated depreciation is the sum of all depreciation expenses that’s why accumulated depreciation exceeds the depreciation if there is depreciation expense in prior year as well.
Does accumulated depreciation increase with a credit?
accumulated depreciation is an asset, so it will increase with a debit.
