Explanation Depreciation: Depreciation is a method of distributing the cost of the fixed assets over its estimated useful life. Depreciation expense of the current accounting period should be reported to match the revenues generated by the equipment in order to measure the net income. Journal entry : Journal entry is a set of economic events which can be measured in monetary terms. These are recorded chronologically and systematically. Accounting rules for Journal entries: To record increase balance of account: Debit assets, expenses, losses and credit liabilities, capital, revenue and gains. To record decrease balance of account: Credit assets, expenses, losses and debit liabilities, capital, revenue and gains. Journalize the transaction for the depreciation on the building for 2015. Date Account titles and explanation Post Ref. Debit ($) Credit ($) 2015 Depreciation expense–Building 14,000 Accumulated depreciation –Building 14,000 ( To record the depreciation expense on building) Table (1) Working Notes: Compute the depreciation expense for the year 2015. Depreciation = Acquisition cost − Residual value Estimated useful life of the asset = $ 500 , 000 − $ 80 , 000 30 Years = $ 14 , 000 Depreciation Expense is an expense account. Expenses decrease Equity value. Therefore, debit Depreciation Expense account. Accumulated Depreciation–Building is a contra-asset account and would have a normal credit balance. Therefore, credit Accumulated Depreciation–Building account. Journalize the transaction for the depreciation on the building for 2016. Date Account titles and explanation Post Ref. Debit ($) Credit ($) 2016 Depreciation expense–Building 17,000 Accumulated depreciation–Building 17,000 ( To record the depreciation expense on building) Table (2) Working Notes: Compute revised depreciation expense

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Chapter 8, Problem 23AE

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Pearson eText for Financial Accounting -- Instant Access (Pearson+)

Ch. 8 - Prob. 1DQ Ch. 8 - Prob. 2DQ Ch. 8 - Prob. 3DQ Ch. 8 - What is depreciation, and why is it used in...Ch. 8 - Prob. 5DQ Ch. 8 - Which depreciation method would be moot...Ch. 8 - Prob. 7DQ Ch. 8 - Prob. 8DQ Ch. 8 - Prob. 9DQ Ch. 8 - Prob. 10DQ

Ch. 8 - Prob. 1SC Ch. 8 - Prob. 2SC Ch. 8 - How should a capital expenditure for a long-term...Ch. 8 - Which depreciation method usually produces the...Ch. 8 - Prob. 5SC Ch. 8 - Prob. 6SC Ch. 8 - Prob. 7SC Ch. 8 - Prob. 8SC Ch. 8 - Prob. 9SC Ch. 8 - Prob. 10SC Ch. 8 - Prob. 11SC Ch. 8 - Prob. 12SC Ch. 8 - Prob. 1SE Ch. 8 - Long-term asset terms (Learning Objective 1) 5-10...Ch. 8 - Prob. 3SE Ch. 8 - Lump-sum purchase (Learning Objective 2) 5-10 min....Ch. 8 - Errors in accounting for long-term assets...Ch. 8 - Concept of depreciation (Learning Objective 3)...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Depreciation methods (Learning Objective 3) 10-15...Ch. 8 - Prob. 9SE Ch. 8 - Prob. 10SE Ch. 8 - Prob. 11SE Ch. 8 - Prob. 12SE Ch. 8 - Prob. 13SE Ch. 8 - Prob. 14SE Ch. 8 - Prob. 15SE Ch. 8 - Other long term assets (Learning Objective 8) 5-10...Ch. 8 - Prob. 17SE Ch. 8 - Prob. 18AE Ch. 8 - Prob. 19AE Ch. 8 - Prob. 20AE Ch. 8 - Prob. 21AE Ch. 8 - Depreciation methods (Learning Objective 3) 15-20...Ch. 8 - Prob. 23AE Ch. 8 - Prob. 24AE Ch. 8 - Prob. 25AE Ch. 8 - Prob. 26AE Ch. 8 - Prob. 27AE Ch. 8 - Prob. 28AE Ch. 8 - Prob. 29AE Ch. 8 - Prob. 30AE Ch. 8 - Prob. 31AE Ch. 8 - Prob. 32BE Ch. 8 - Prob. 33BE Ch. 8 - Prob. 34BE Ch. 8 - Prob. 35BE Ch. 8 - Prob. 36BE Ch. 8 - Prob. 37BE Ch. 8 - Prob. 38BE Ch. 8 - Prob. 39BE Ch. 8 - Prob. 40BE Ch. 8 - Prob. 41BE Ch. 8 - Prob. 42BE Ch. 8 - Prob. 43BE Ch. 8 - Prob. 44BE Ch. 8 - Prob. 45BE Ch. 8 - Long-term asset costs and partial-year...Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 48AP Ch. 8 - Prob. 49AP Ch. 8 - Prob. 50AP Ch. 8 - Prob. 51AP Ch. 8 - Prob. 52AP Ch. 8 - Prob. 53BP Ch. 8 - Journalizing long-term asset transactions...Ch. 8 - Prob. 55BP Ch. 8 - Prob. 56BP Ch. 8 - Prob. 57BP Ch. 8 - Prob. 58BP Ch. 8 - Prob. 59BP Ch. 8 - Prob. 1CE Ch. 8 - Prob. 1CP Ch. 8 - Continuing Financial Statement Analysis Problem...Ch. 8 - Prob. 1EIA Ch. 8 - Prob. 2EIA Ch. 8 - Financial Analysis Purpose: To help familiarize...Ch. 8 - Prob. 1IA Ch. 8 - Prob. 1SBA Ch. 8 - Written Communication A client of yours notified...

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Record the depreciation expense on the building for the years 2015 and 2016.

Solution Summary: The author explains that depreciation is a method of distributing the cost of the fixed assets over its estimated useful life. Journal entries are recorded chronologically and systematically.

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Record the depreciation expense on the building for the years 2015 and 2016.

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