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

Reconsolidation, In the process of giving information from a business to a ...

In the process of giving information from a business to a prospective buyer, an accountant is requesting a Reconsolidation for last December. What is that?

The magnitude of operating leverage for perkins corporation, The magnitude ...

The magnitude of operating leverage for Perkins Corporation is 3.4 when sales are $100,000, if sales increase to $110,000, profits would be expected to increase by what percent?

Net present value, Having trouble with word problem: Planned Acquisition ...

Having trouble with word problem: Planned Acquisition cost $2.1M Salvage Value $0 16% discount rate savings = year end Savings: year 1 150k year 2 175k year 3 300K year

What is the gross income from the distribution?, Zack is a farmer who buys ...

Zack is a farmer who buys his feed and fertilizer from a farmer cooperative. In 2012, Zack purchased $300,000 in feed and fertilizer for the farm and $10,000 of household goods. Be

Accounting Assignment, Go to http://moneycentral.msn.com and look up the ...

Go to http://moneycentral.msn.com and look up the companies Lowe’s (symbol: LOW) and Home Depot (symbol: HD). To the left, you will see several different tabs. At the bottom, yo

Show work and formulas, An airfoil of surface area 1ft squared is tested fo...

An airfoil of surface area 1ft squared is tested for lift (L) in a wind tunnel. At an angle of attack of 5 degrees with standard air of density 0.0024 slugs/ft cube at a speed of 1

Find out the present value of the profit, Oil production has been proposed ...

Oil production has been proposed for an area along the coast off Southern California. Oil production would jeopardize the use of beaches along 10 miles of coast which are a major v

Applied research project, I just want part A and Part B including ppt slide...

I just want part A and Part B including ppt slides to present.

Importance of accounting in the public sector, Problem 1: i) Assess th...

Problem 1: i) Assess the importance of accounting in the Public Sector. ii) How far has the Governmental Accounting Standards Board (GASB) changed financial reporting, ass

What is sales revenues, Q. What is Sales revenues? The sale of goods ta...

Q. What is Sales revenues? The sale of goods takes place between two parties. The seller of the merchandise transfers them to the buyer in exchange for cash or a promise to pay

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