LESSON 8 2 Calculating and Journalizing Depreciation Expense

LESSON 8 -2 Calculating and Journalizing Depreciation Expense CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2

2 STRAIGHT-LINE DEPRECIATION – = = Original Cost Estimated Salvage Value Estimated Total Depreciation Expense Years of Estimated Useful Life Annual Depreciation Expense Year 3 page 230 $2, 000. 00 – 175. 00 $1, 825. 00 5 $ 365. 00 Beginning Book Value – Annual Depreciation = Ending Book Value $1, 270. 00 – $365. 00 = $905. 00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2

3 RECORDING DEPRECIATION ON PLANT ASSET RECORDS 1 2 page 231 3 1. Calculate annual depreciation expense. 2. Calculate accumulated depreciation. 3. Calculate ending book value. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2

4 JOURNALIZING ANNUAL DEPRECIATION EXPENSE page 232 Depreciation Expense—Office Equipment Dec. 31 Adj. 11, 571. 00 Accumulated Depreciation—Office Equipment Jan. 1 Bal. Dec. 31 Adj. Dec. 31 Bal. 37, 434. 00 11, 571. 00 49, 005. 00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2

5 CALCULATING DEPRECIATION EXPENSE FOR PART OF A YEAR × page 232 Annual Depreciation Expense $ 120. 00 Months in a Year 12 Monthly Depreciation Expense $ 10. 00 Number of Months Asset Is Used × 5 Partial Year’s Depreciation Expense $ 50. 00 CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2

6 TERMS REVIEW page 234 n straight-line method of depreciation n book value of a plant asset CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 8 -2