Asked by Alexis Karageanes on May 22, 2024
Verified
A company depreciates its equipment $500 a year. The adjusting entry on December 31 is a debit to Depreciation Expense, $500, and a credit to Equipment, $500.
Depreciates
The process by which the value of an asset decreases over time, usually due to wear and tear or obsolescence.
Depreciation Expense
The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value of the asset over time due to use and wear and tear.
Equipment
Tangible assets used in operations, such as machinery and office furniture, which have a useful life of more than one accounting period.
- Understand the concept and accounting treatment of depreciation.
Verified Answer
KR
Kelsie RichardsMay 27, 2024
Final Answer :
False
Explanation :
The correct adjusting entry should be a debit to Depreciation Expense, $500, and a credit to Accumulated Depreciation, $500. Accumulated Depreciation is the contra asset account that records the total depreciation of an asset over time, not a direct reduction of the Equipment account.
Learning Objectives
- Understand the concept and accounting treatment of depreciation.