Accounting for Plant Assets and Depreciation

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Presentation transcript:

Accounting for Plant Assets and Depreciation Chapter 18, Section 3 Journalizing Depreciation Expense

Preparing Plant Asset Records Lesson 21-3 (GJ) Preparing Plant Asset Records 1 1. Write the information in Section 1 when the asset is purchased. 2 2. Do not write in Section 2 until the asset is disposed of. 3 3. Each year the asset is owned, record the year’s annual depreciation expense in Section 3. Calculate and record accumulated depreciation and ending book value.

Accounts Affected by Depreciation Office/Store Equipment Asset account to record original cost Depreciation Expense—Office/Store Equipment Expense account to record amount of annual depreciation expense Accumulated Depreciation—Office/Store Equipment Contra asset account to record accumulated depreciation

Journalizing Annual Depreciation Expense 1 2 1 1. Adjustment is planned on the worksheet first a. Depreciation Expense debit b. Accumulated Depreciation credit 2. Journalize adjusting entry (remember the heading “Adjusting Entries”)

Posting an Adjusting Entry for Depreciation Expense 1. Debit Depreciation Expense 2. Credit Accumulated Depreciation 1 2

PROBLEMS Complete the following on www.aplia.com Work Together 18-3 (text pg. 545) On Your Own 18-3 (text pg. 545) Application Problem 18-3 (text pg. 556) Application Problem 18-4 (text pg. 557)