How would depreciation affect the balance sheet?
submitted by tanvir

Ronco5000

You would debit Depreciation and credit Fixed Assets. It wouldn't affect cash in any way.To see the effect of depreciation on a balance sheet, take a look at the Interactive Balance Sheet.

JRjohnson

Depreciation only affects the value of an asset on the balance sheet.

On the profit/loss statement it's counted as an expense, because you're technically losing money. It counts toward the total expenses, and therefore lowers earnings on the balance sheet.

shen

Depreciation is a contra asset account and it therefore reduces the amount of depreciable assets.

Liaqat

Depreciation is used to show high expense and decrease the tax cost. As the fixed asset loses its value over the passage of time, depreciation is there to compensate the business with this losing of value. The effect of depreciation is shown on the income statement which is recorded as an expense.

depn

You would debit depreciation in the profit and loss a/c and 2nd effect less from balance sheet from the asset because the value of the asset decreases when the asset is being used.

manik kumar

It totally depends on the account. It will affect the journal differently in different cases.

akala akintunde

depreciation will reduce the value of Asset in the balance sheet and affect the profit brought forward. then in the profit or loss it would be expensed

poppy

Depreciation reduces the book value of fixed assets on the balance sheet.

Because depreciation allocates the cost of an asset over time, this doesn't happen all at once. The asset's net book value decreases as depreciation expense accumulates.

theGOAT

Depreciation shows up on the balance sheet as a reduction in the value of your assets, like equipment or buildings. As assets get older and wear out, their value on the books goes down.

Ug Lee

On the balance sheet, it's shown as accumulated depreciation, which is subtracted from the asset's original cost to show how much the asset is worth now.

Awful Waffle

Depreciation isn't directly shown as a line item on the balance sheet. Instead, it's recorded as accumulated depreciation, which is subtracted from the asset's original cost to show the net book value. So, on the balance sheet, you'll see the asset's cost minus accumulated depreciation under the property, plant, and equipment section.

can ya believe it

Depreciation is treated as a contra asset account called accumulated depreciation. It's deducted from the gross book value of the asset on the balance sheet, which give you the net book value. This way, the asset's carrying amount reflects wear and tear over time.

Rod Smith

On the balance sheet, instead of showing the full original price, you'd show the remaining value after accounting for depreciation, which is stored in an account called accumulated depreciation.