• We’re currently investigating an issue related to the forum theme and styling that is impacting page layout and visual formatting. The problem has been identified, and we are actively working on a resolution. There is no impact to user data or functionality, this is strictly a front-end display issue. We’ll post an update once the fix has been deployed. Thanks for your patience while we get this sorted.

Have a quick accounting question.

fuzzybabybunny

fuzzybabybunny

Moderator<br>Digital & Video Cameras
Moderator
On the depreciation adjusting entry for the end of the month I have to

Debit Depreciation Expense
Credit Accumulated Depreciation

In class all we've done is depreciate one thing, say a mower in the Equipment asset account.

What do you do when you have to depreciate two things in the Equipment asset account, but both of those "things" is called "mowing equipment"?

Equipment A Depreciation: $1000
Equipment B Depreciation: $1500

Can I just lump together depreciation like this:

Jan-31
Debit Depreciation Expense: $2500
Credit Accumulated Depreciation: $2500
Comment: Depreciate Mowing Equipment

or do I have to do each equipment by itself:

Jan-31
Debit Depreciation Expense: $1000
Credit Accumulated Depreciation: $1000
Comment: Depreciate Mowing Equipment

Jan-31
Debit Depreciation Expense: $1500
Credit Accumulated Depreciation: $1500
Comment: Depreciate Mowing Equipment
 
Originally posted by: gopunk
i have no clue, but if i had to guess it would be to do it separately.
Click to expand...

Thanks. I'm leaning towards that conclusion also. Just seems... safer.
 
Gosh, I'm not sure anymore.

Both of the equipment things are simply classified as "mowing equipment."

OP has been edited.
 
Yeah the first one, just lump it one entry. If you had 1000 truck trailers it'd be a bitch to do each one. It's just a single entry, even if you are hitting seperate accounts like:

Mowing Equipment 1000
Truck Equipment 1000
Accumulated Depreciation 2000
 
Originally posted by: BrunoPuntzJones
Yeah the first one, just lump it one entry. If you had 1000 truck trailers it'd be a bitch to do each one. It's just a single entry, even if you are hitting seperate accounts like:

Mowing Equipment 1000
Truck Equipment 1000
Accumulated Depreciation 2000
Click to expand...

Cool. Thanks!
 
It depends, most times you can do it together in one entry, if the equipment was purchased together and then depreciated by straight-line, rather than by usage. Some companies want really detailed tracking/entries for depreciation, mostly rental places, so they'll have an entire account book just for equipment depreciation, and they'll do it individually by usage (hours or miles or whatever), then show the entire depreciation each day/month/quarter/year in their main books with a note to see the depreciation book.

But yeah, just do it as a lump sum 🙂...if anyone asks how you'd know what depreciated by how much, just say that a seperate account is kept for that information.
 
Accumulated Depreciation is a contra asset, meaning it is attatched to a certain account. Each asset that depreciates has an accumulated depreciation contra asset.

If you have two assets, both depreciating, you can combine both depreciation expenses into one expense entry, however, the accumulated depreciation needs to be broken out since they each go with a different asset.

For example:

You have:
Truck Depreciation of $1000
Copy Machine Depreciation of $100

The entry would look like this:

Depreciation Expense $1100
.............................................Accumulated Depreciation; Truck $1000
.............................................Accumulated Depreciation; copy machine $100
 
Originally posted by: krunchykrome
Accumulated Depreciation is a contra asset, meaning it is attatched to a certain account. Each asset that depreciates has an accumulated depreciation contra asset.

If you have two assets, both depreciating, you can combine both depreciation expenses into one expense entry, however, the accumulated depreciation needs to be broken out since they each go with a different asset.

For example:

You have:
Truck Depreciation of $1000
Copy Machine Depreciation of $100

The entry would look like this:

Depreciation Expense $1100
.............................................Accumulated Depreciation; Truck $1000
.............................................Accumulated Depreciation; copy machine $100
Click to expand...

Yes, that's the way generally we do it.

It is necessary to keep up with each asset's individual amount of depreciation in the event it is sold. The amount of accum depreciation must be known so that any gain or loss on its disposition can be properly calculated.

If the client company has a large amount of depreciable assets, we use programs to assist with the calc of depreciation & keeping track of each asset.

I think, however, if there were a large of number of assets it would acceptable (and is probrably practiced) to aggregate similar assets together and do "lump sum" entries.

Fern
 
You must log in or register to reply here.

TRENDING THREADS

Back
Top