CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

LESSON 14-5LESSON 14-5

Planning and Recording Depreciation Adjustments

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LESSON 14-5CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

CALCULATING DEPRECIATION EXPENSE CALCULATING DEPRECIATION EXPENSE AND BOOK VALUEAND BOOK VALUE page 424

Estimated TotalDepreciation

Expense=

EstimatedSalvage Value

–Original

Cost

$1,000.00=$250.00–$1,250.00

AnnualDepreciation

Expense=

Years ofEstimated

Useful Life÷

Estimated TotalDepreciation

Expense

$200.00=5÷$1,000.00

1. Subtract the asset’s estimated salvage value from original cost.

2. Divide the estimated total depreciation expense by the years of estimated useful life.

11

22

(continued on next slide)

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LESSON 14-5CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

CALCULATING DEPRECIATION EXPENSE CALCULATING DEPRECIATION EXPENSE AND BOOK VALUEAND BOOK VALUE page 424

20X3AccumulatedDepreciation

=20X3

DepreciationExpense

+20X2

AccumulatedDepreciation

$600.00=$200.00+$400.00

EndingBook Value

=AccumulatedDepreciation

–Original Cost

$650.00=$600.00–$1,250.00

(continued from previous slide)

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LESSON 14-5CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

ANALYZING AND RECORDING ADJUSTMENTS ANALYZING AND RECORDING ADJUSTMENTS FOR DEPRECIATION EXPENSEFOR DEPRECIATION EXPENSE page 425

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22

33

33

1. Write the debit amounts.

2. Write the credit amounts.

3. Label the adjustments.

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LESSON 14-5CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning

TERMS REVIEWTERMS REVIEW

current assets plant assets depreciation expense estimated salvage value straight-line method of depreciation accumulated depreciation book value of a plant asset

page 426