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

Explain about financial statement, Q. Explain about financial statement? ...

Q. Explain about financial statement? The income statement is the statement of retained earnings the balance sheet and the statement of cash flows of Metro Courier Inc demonstr

What is prepaid expense, Q. What is Prepaid expense? A prepaid expense ...

Q. What is Prepaid expense? A prepaid expense is an asset pending assignment to expense such as prepaid rent, prepaid insurance and supplies on hand. Note that the character of

Accounting concepts, What is the implication of applying accounting concept...

What is the implication of applying accounting concepts wrongly

Purpose of adjusting entries, Q. Purpose of adjusting entries? In this ...

Q. Purpose of adjusting entries? In this section we exemplify each of the four types of adjusting entries asset/expense liability/revenue, asset/revenue and liability/expense.

State the term- purchases returns and allowances, State the term- Purchases...

State the term- Purchases Returns and Allowances Purchases Returns and Allowances is the name of the account which provides better control of allowances and returns of mercha

Determine about the sales returns and allowances, Determine about the Sales...

Determine about the Sales returns and allowances Allowance results when a buyer decides to keep defective or damaged goods though at a reduction from the original price.

Explain accounting cycle, Q. Explain accounting cycle? Creditors, Inves...

Q. Explain accounting cycle? Creditors, Investors as well as Managers use these statements in evaluating management's past decisions and as a basis for making future decisions.

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

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