Accounting for beginners #7 / Depreciating an Asset / Basics

what everybody?? We back for some more
action. Let's go !!!! Now we're going to Depreciate what we did in
the previous accounting video, we're going to Depreciate this truck, in the
next video i'll say how we came up with a Depreciation, but let's
just say, that we came up with our depreciation. Depreciation is going to be five
thousand dollars for the year. alright, the truck Depreciates
5,000 year ok , so what's the journal entry for that?? how do you do that?? ok, now let me
fill you in on something this truck is already on the books ok, these are books, this is our Balance Sheet
truck is already on there. you don't touch the truck account unless you sell
it. until you scrap it. or sell it. you don't touch it when you do depreciation
you lower the value with account called accumulated depreciation which
is a contra asset ok , we have to do our DC/ADE/LER
and if you don't know want this is by now shame on you, or watch my other videos.

okay, SRS !!! where was I? ok, so you don't touch the the actual
truck account until you do something with the vehicle, so Depreciate
5,000 year and the journal entry for that, you've
heard of, its an Expense, Depreciation Expense ok, so we're going to say here
Depreciation look, that's our debit right here, that's
our debit expense ok, Depreciation Expense
for the truck, we say Depreciation Expense, ok, we determine that it's gonna
be five thousand dollars for this year Depreciation Expense 5,000 and what's
going to be our credit?? what's going to be our credit??
we're going to use a term called Accumulated Depreciation.

and it's going
to accumulate, so it's going to go up every year until it reaches a certain point.
or you sell or whatever, but its the first year it's on the books, so our Credit
is gonna be Accumulated Depreciation you Accumulated Depreciation
that going to be 5,000 So that's our credit alright, that's our credit, so you got
Debit / Credit matches. now how's that look? how's that gonna look on the Balance
Sheet??? because now your truck Depreciate $5,000 it was
30 so now it's only worth twenty-five thousand
dollars, but please don't go into the truck account, and less than
that by five dollars, or 5,000 don't do that, you do with Accumulated
Depreciation, see this is the Journal entry for Depreciation. Debit: Depreciation Expense
Credit: Accumulated Depreciation this would be truck you want it because
you're going to have different maybe different Assets different things you
accumulate so now this is how the the Balance Sheet would look, if we if we did
that, we're going to say this is our only Expense, Depreciation Expense
was our only expense for the year.

For this example, so you have
a truck, then you have a you have Accumulated Depreciation 5,000 the
parentheses is a negative so then you have 25,000 in your fixed assets ok, so you didn't touch the truck account.
you just messed with the Accumulated Depreciation account for the truck. okay, so anyways this isn't going to be
80 any more, because you're 15 cash and twenty-five thousand in fixed Assets, it's
going to be 75,000 Fucking rough 7 huh ?? Damn, i am getting big boy !!!! your net income because you had an
expensive 5,000 this is going to change 15,000 doesn't Expense, it's going to
lower your profit, your income, and that's gonna change this to 75,000 So that's
how you book a Depreciation entry.

PEACE !!!!!!!!!!.

Contact Us

Scroll to Top