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Would accumulated depreciation be set up as an expense account or other?
Wiki User
β 16y ago
It would not be an expense. It would be a line item on the balance sheet, not sure which line item it would fall under.
Wiki User
β 16y ago
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Can depreciation on a Fixed Asset be carried as a contra-asset on its own line on the balance sheet or does it have to be deducted from the Fixed Asset?
Depreciation of a Fixed Asset is always carried on the Balance Sheet in the Accumulated Depreciation Account (contra-asset). It is never deducted from the Fixed Asset.One reason for the Accumulated Depreciation account is that eventually, individual assets will be fully depreciated and their net values will be zero. If the depreciation were deducted from the asset, it would "fall off" the balance sheet. The accumulated depreciation account allows the assets to remain at book value in the asset account to maintain their visual presence on the books.The depreciation entry debits depreciation expense and credits accumulated depreciation.
What would the journal entry be if a company incurred an expense?
There may be more than one way to record an expense. The easiest journal to think about is when you've used cash to pay for the expense. In that case, you would debit an expense account and credit cash. But, if you've received the benefit of an expense but have not yet paid for it the debit would still be the expense account but the credit would be a liability account. Of course, there are times when cash flows but no expense is recognized such as investments in property, plant and equipment. After that expenditure is made you would recognize periodic expenses in the form of depreciation. That would be a debit to depreciation expense and a credit to accumulated depreciation.
Is depreciation an operating expense?
Depreciation is an operating expense but does not involve any cash flow. like salaries,rent insurance etc it is included in the P/L accounts.It is considered as operating because machinery/equipments or any property diminishes its value day by day.
What is the double effect of depreciation?
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.
What kind of an account is accumulated depreciation?
Accumulated depreciation is a contra asset account. Contra asset accounts are used to record the depreciation of an asset, which is a reduction in the asset's value due to wear and tear or obsolescence. Accumulated depreciation is recorded on a company's balance sheet as a reduction from the original cost of a fixed asset. For example, if a company buys a building for $100,000 and estimates that the building will last for 20 years, it might record $5,000 of depreciation expense per year. After four years, the accumulated depreciation for the building would be $20,000, which would be recorded as a reduction from the original cost of the building on the company's balance sheet. Here is my recommendation πΊβ Κ°Ε¦πΟοΌ³://ο½Κ·ε±±.πΞΉβΌβδΈΡβπβ¬ββ.βαΠΌ/ε°ΊΞ΅ΰΉπ¦Ε/βββ½ββΈβ /αΆ€πββΆπ§α΅αͺβα©πβ½Ρ²βΎ/ ππ
Which account would normally have a credit balance?
The Liablilities, the revenue, the accumulated depreciation, the Owner's equity.
Is depreciation an asset liability or equity?
no Depreciation Expense is an expense on your Statement of Comprehensive Income (Profit and Loss Account) The depreciation expense in the year would then reduce the value of the asset to which the depreciation relates. If you have any further questions on this topic, please do not hesitate to contact me at info@hodgsons.co.uk -------------------------------------------- With Regards to the Accounting Equation. Equity (NAV)= Assets- Liabilities Depreciation would be considered negative equity (as are all expenses) as they represent a decrease in the net asset value- or NAV- (not through transaction with the entities owner)
Is the depreciation expense added to net income?
Be Careful depreciation is an accounting function but when booked on the P&L it better be going to a depreciation "Sweep Account". Otherwise you are booking depreciation as paper money only! And four or five years down the road you will have nothing to show for it.
What would a permanent accounts include accumulated depreciation?
yes
Is depreciation is an asset liability or equity?
no Depreciation Expense is an expense on your Statement of Comprehensive Income (Profit and Loss Account) The depreciation expense in the year would then reduce the value of the asset to which the depreciation relates. If you have any further questions on this topic, please do not hesitate to contact me at info@hodgsons.co.uk -------------------------------------------- With Regards to the Accounting Equation. Equity (NAV)= Assets- Liabilities Depreciation would be considered negative equity (as are all expenses) as they represent a decrease in the net asset value- or NAV- (not through transaction with the entities owner)
The book value of a plant asset is?
The book value of a fixed asset (PP&E) is the difference between the fixed asset account and it's related accumulated depreciation account. You have a truck you paid $25,000 and you have depreciated it for the amount of $10,000 then the "book value" would be $15,000.
You purchased a delivery van for 23000 with a salvage value of 3000 on sept 1 It has a useful life of 5 yrs using the straight-line method how much depreciation expense should be in Dec?
The annual depreciation expense for the delivery van would be calculated as (Cost - Salvage Value) / Useful Life. In this case, the annual depreciation expense would be (23000 - 3000) / 5 = 4000. For December, you would have incurred 4/12 of the annual depreciation expense, which equals 1333.33.
