Show accumulated depreciation account with example, Accounting Basics

Assignment Help:

Q. Show Accumulated depreciation account with example?

Micro Train credits the depreciation amount to an accumulated depreciation account which is a contra asset rather than directly to the asset account. Companies utilize contra accounts when they want to show statement readers the original amount of the account to which the contra account relates. For example for the asset Trucks it is useful to know both the original cost of the asset and the total accumulated depreciation amount recorded on the asset. Thus the asset account shows the original cost. The contra account Accumulated Depreciation on Trucks shows the total amount of recorded depreciation from the date of acquisition. By keeping both original cost and the accumulated depreciation amounts a user can calculate approximately the approximate percentage of the benefits embodied in the asset that the company has consumed. For example assume the accumulated depreciation amount is about three-fourths the cost of the asset. After that the benefits would be approximately three-fourths consumed and the company may have to replace the asset soon.

Therefore to provide more complete balance sheet information to users of financial statements companies show both the original acquisition cost and accumulated depreciation. In the preceding instance for adjustment 4 the balance sheet at 2010 December 31 would show the asset and contra asset as follows

Assets

Trucks USD 40000

Less: Accumulated depreciation 750

USD 39250

As you may perhaps expect the accumulated depreciation account balance enhance each period by the amount of depreciation expense recorded until the remaining book value of the asset equals the estimated residual value.


Related Discussions:- Show accumulated depreciation account with example

The operating expenses section, The operating expenses section Operati...

The operating expenses section Operating Expenses - directly associated to the sale of merchandise General expenses (administrative expenses) related to business's offic

Determine the various approaches to product costing, Details: Costing prod...

Details: Costing products is a matter of considerable importance to organizations. The need for accurate product costs ranges from cost identification for inventory valuation purp

Accounting, #questiSean Corp. issued a $60,000, 10 year bond at the face ra...

#questiSean Corp. issued a $60,000, 10 year bond at the face rate of 8% annually on 1/1/X0. The market rate was 10%. How much cash will the bond investors receive at the end of the

How to capitalize my patents?, How can I capitalize my patents? My company ...

How can I capitalize my patents? My company has applying for a patent and I want to capitalize the research and development expenditures. I know it will cost some legal charges and

Determine the proposal''s appropriateness and economic, Determine the propo...

Determine the proposal's appropriateness and economic viability. For all scenarios, assume spending occurs on the first day of each year and benefits or savings occurs on the las

MRSRAMOS, I AM HAVING DIFFICULTIES SOLVING ONE PARTICULAR ACCOUNTING PROBLE...

I AM HAVING DIFFICULTIES SOLVING ONE PARTICULAR ACCOUNTING PROBLEM

Dogwood florist opened a business january 1st 2010., Dogwood florist opened...

Dogwood florist opened a business January 1st 2010. During 2010, they had the following transactions and economic events. For each of the transactions and economic events prepare

Illustrate unearned service fees, Q. Illustrate unearned service fees? ...

Q. Illustrate unearned service fees? Micro Train reports the service income in its income statement for 2010. The company enters the USD 3000 balance in the Unearned Service Fe

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd