# What is the Adjusting Journal Entry for Depreciation and Accumulated Depreciation? Whether a company records its depreciation monthly or yearly, an adjusting journal entry is made to adjust the balance of depreciation expense and to record the the loss of value of the asset in the accumulated depreciation account. The journal entry is a debit to Depreciation Expense and a credit to the contra asset Accumulated Depreciation.

When the entry is posted to the accounts, Depreciation Expense has increased and Accumulated Depreciation has increased. The new Accumulated Depreciation total then moves to the Balance Sheet where it shows the total reduction in the assets value from the time the asset was purchase. The Depreciation Expense is accumulating, adding up over time.

Assuming that the asset in question has a 5 year useful life and the company uses Straight Line Depreciation, the next year’s entry will be:

The new Accumulated Depreciation amount will be \$2,000 + \$2,000 = \$4,000. The Balance Sheet will now show this:

The Depreciation has Accumulated to \$4,000. The Net Book Value of the asset is now \$6,000. Notice we haven’t touched the original (historic) cost of the asset. We are tracking the loss in value using the Accumulated Depreciation contra asset account.

For a complete Accounting Student Guide for depreciation, check out this article:

• ## Difference Between Depreciation, Depletion, Amortization

In this article we break down the differences between Depreciation, Amortization, and Depletion, discuss how each one is used, and what the journal entries are to record each. The main

• ## Adjusting Journal Entries | Accounting Student Guide

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• ## How to Calculate Straight Line Depreciation

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• ## How to Calculate Declining Balance Depreciation

Declining Balance Depreciation is an accelerated cost recovery (expensing) of an asset that expenses higher amounts at the start of an assets life and declining amounts as the class life