A few days ago
majax79

Does accumulated depreciation always equal the depreciation expense?

Does accumulated depreciation always equal the depreciation expense?

Top 3 Answers
A few days ago
clapika_86

Favorite Answer

No. Accumulated depreciation is depreciation accumulated every year and it will only increase and won’t decrease. Depreciation expenses is incurred every year.
0

A few days ago
fivestring46
An asset is classified as a fixed asset if it’s life is determined to be relatively long. As the asset ages and becomes worn, a portion of it is written off as expense each year. A contra asset account which follows the asset keeps a total of each years depreciation expense. This account is called accumulated depreciation. This is a credit balanced account which is contra to the debit balance the asset carries. The depreciation is calculated in a number of different ways which you can research.

An example of the entries for a purchase of equipment and the recording of one years depreciation might be:

purchase

Jan. 1, 2006

dr equipment 20,000.

cr cash 20,000.

depreciation for the year

Dec. 31, 2006

dr depreciation expense 4,000.

cr accumulated depreciation 4,000.

To determine the book value of the equipment, you would take the cost of the equipment 20,000. less the accumulated depreciation 4,000. which would equal 16,000. 16,000. is the book value

Let’s do one more entry for depreciation the following year:

Dec. 31, 2007

dr depreciation expense 4,000.

cr accumulated depreciation 4,000.

Now the balance in the accumulated depreciation is 8,000.

So the book value would now be 20,000. less 8,000. equals

12,000.

Of course, each year the depreciation expense will close.

The accumulated depreciation increases, (up to a point).

And, the book value decreases.

I hope this helps.

0

4 years ago
?
Accumulated Depreciation Expense
0