Entity D purchased equipment at a cost of $520,000 in January 2022. As of January 1, 2024, depreciation of $104,000 had been recorded on this equipment Depreciation expense for 2024 is $52,000. After the adjustments are recorded and posted on December 31, 2024, what are the balances for the Equipment and Accumulated Depreciation accounts? Equipment Accumulated Depreciation $520,000 $156,000 $520,000 $52,000 $520,000 $ 88,000 $364,000 $0

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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.