1. BAF3M
Depreciation
Expense

2. Homework Check
Exercise 2 (A,B)

3. Page 348, Exercise 2 (A)

4. Page 348, Exercise 2 (B)

5. Depreciation Expense It would make sense to make the following
adjusting entry:
Depreciation Expense ,000
Vehicle ,000
Depreciation Expense
(1) 30,000
Vehicle
30,000 (1)

6. Depreciation Expense However, we also want to keep track of the
original value of an asset (and not keep chipping
away at its value) , so we create a new
account called ‘Accumulated Depreciation’
Depreciation Expense
(1) 30,000
Accumulated Depreciation - Vehicle
30,000 (1)

7. Depreciation Expense Adjusting journal Entry is then:
Accumulated Depreciation-Vehcile ,000
** Accumulated Depreciation is known
as a ‘contra-asset’ account **

8. Less: Accumulated Depreciation
The account is shown on our balance
sheet in the following way:
Fixed Assets
Vehicle ,000
Less: Accumulated Depreciation , ,000

9. Adjustment
Let’s look at page 342.
Notice the two adjustments for
depreciation.
Now look at page 344.
Notice how these accounts
are reflected on the balance
sheet.

10. Note
Depreciation Expense
The Depreciation Expense is the amount of
depreciation taken in a given fiscal period.
The depreciation is not taken directly off
the asset, rather it is accumulated in
an account called ‘accumulated
depreciation – (asset) ‘
The adjusting entry is as follows:
Depreciation Expense ,000
Accumulated Depreciation – Vehicle 30,000

11. When the accounts are shown on the balance
sheet, the accumulated depreciation (a
contra-asset account) is listed below the
original asset, like so:
Fixed Assets
Vehicle ,000
Less: Accumulated Depreciation , ,000

12. Homework
Page 360: Exercise 6
There are six pieces of additional
information here.
The last two are quite tricky.
Don’t be afraid to make extra
accounts if necessary.
Try your best.
Do:
Worksheet
Journal Entries (Adjusting & Closing Entries)
Post-Closing Trial Balance
Income Statement & Classified Balance Sheet