An asset costs R10 000 and has a useful life of five years and a residual value of R1 000. Which one of the following reflects the correct journal entry for the depreciation amount per month using the straight-line method? A. Dr Vehicles and Cr Depreciation with R167. B. Dr Depreciation and Cr Vehicles with R150. C. Dr Vehicles and Cr Depreciation with R150. D. None of the options provided
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
An asset costs R10 000 and has a useful life of five years and a residual value of R1 000. Which one of the following reflects the correct
- A. Dr Vehicles and Cr Depreciation with R167.
- B. Dr Depreciation and Cr Vehicles with R150.
- C. Dr Vehicles and Cr Depreciation with R150.
- D. None of the options provided
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