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Recording Depreciation in The Accounting Books
Recording Depreciation in The Accounting Books
In order to show a fixed assets bought and its subsequent depreciation in the
books, you must prepare the following:
1. The fixed asset account – this account records the date, detail and cost
price of the asset bought.
2. The Provision for depreciation account – this account records the yearly
amount that is written off as depreciation. It also shows the accumulated
depreciation after each year of use (when it is balanced off).
3. The Profit and Loss Account Extract – this shows the yearly depreciation
amount being written off as an expense. DEPRECIATION IS AN EXPENSE.
4. The Balance Sheet Extract – this shows the net book value (current value)
of the fixed assets by deducting accumulated depreciation from the cost of
the fixed asset.