How does one record depreciation for the year and provision for depreciation at year end in the profit and loss account and balance?
submitted by sibusisiwe mutema

Dekimbe

Start by calculating the annual depreciation expense using whatever method your company uses. The depreciation amount is debited to the profit and loss account, which reduces reducing net profit. Credit accumulated depreciation in the balance sheet under fixed assets.

At year-end, you'll also record a provision for depreciation by adjusting the accumulated depreciation account. That entry would be:

Debit depreciation expense
Credit accumulated depreciation

Fellsworth

At the end of the year, you calculate how much the asset has depreciated. Then you record that amount as an expense in the profit and loss account by debiting depreciation expense. On the Balance Sheet, you increase the accumulated depreciation (which is a contra-asset account). The journal entry is: debit depreciation expense, credit accumulated depreciation. This way, both the profit statement and the balance sheet show the depreciation properly.