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Hallo,
when working with depreciation and accumulated depreciation account, I read in two places Open Tuition notes and BPP two different things, are there two ways of doing it, or these mean the same:
1. e.g. OT says – that in the Depreciation expense a/c
Dr Depreciation expense
Cr I/SDr Cash Why is it cash here – is that always or not?
Cr Accumulated depr. SOFP a/c2. and BPP, says – that in the Accumulated depreciation a/c
Dr Accumulated depr.
Cr I/SWhat is the difference between these two, if Accumulated depreciation is a SOFP a/c how can we transfer the balance to the I/S?
And why in 1. we use Cash as Dr, do we really have Cash in the Accumulated depr. a/c?
Thank you!
Open tuition does not say anywhere that the entry for depreciation is DR Cash CR Accumulated depreciation account!
Not does BPP say anywhere that the entry for depreciation is Dr Accumulated Depreciation CR Income Statement!!
The entry for depreciation is Dr Depreciation Expense Cr Accumulated Depreciation. And then transfer the expense to the Income Statement: Dr Income Statement Cr Depreciation expense.
(You can make it quicker by having just the one entry: Dr Income Statement Cr Accumulated depreciation. This obviously has the same effect, but it not strictly as good.)
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