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Accounting for beginners #7 / Depreciating an Asset / Basics

what everybody?? We back for some more action. Let's go !!!! Now

we're going to Depreciate what we did in the previous accounting video, we're

going to Depreciate this truck, in the next video i'll say how we came up with a

Depreciation, but let's just say, that we came up with our

depreciation. Depreciation is going to be five thousand dollars for the year.

alright, the truck Depreciates 5,000 year

ok , so what's the journal entry for that??

how do you do that?? ok, now let me fill you in on something

this truck is already on the books

ok, these are books, this is our Balance Sheet truck is already on there. you don't

touch the truck account unless you sell it. until you scrap it. or sell it. you

don't touch it when you do depreciation you lower the value with account called

accumulated depreciation which is a contra asset

ok , we have to do our DC/ADE/LER and if you don't know want this

is by now

shame on you, or watch my other videos. okay, SRS !!! where was I?

ok, so you don't touch the the actual truck account until you do

something with the vehicle, so Depreciate 5,000 year

and the journal entry for that, you've heard of, its an Expense, Depreciation

Expense

ok, so we're going to say here Depreciation

look, that's our debit right here, that's our debit expense

ok, Depreciation Expense for the truck, we say Depreciation

Expense, ok, we determine that it's gonna be five thousand dollars for this year

Depreciation Expense 5,000 and what's going to be our credit??

what's going to be our credit?? we're going to use a term called

Accumulated Depreciation. and it's going to accumulate, so it's going to go up

every year until it reaches a certain point. or you sell or whatever, but its the

first year it's on the books, so our Credit is gonna be Accumulated Depreciation you

Accumulated Depreciation that going to be 5,000 So that's our credit

alright, that's our credit, so you got Debit / Credit matches. now how's that look?

how's that gonna look on the Balance Sheet??? because now

your truck Depreciate $5,000 it was 30

so now it's only worth twenty-five thousand dollars, but please don't go

into the truck account, and less than that by five dollars, or 5,000 don't do

that, you do with Accumulated Depreciation, see this is the Journal

entry for

Depreciation. Debit: Depreciation Expense Credit: Accumulated Depreciation

this would be truck you want it because you're going to have different maybe

different Assets different things you accumulate so now this is how the the

Balance Sheet would look, if we if we did that, we're going to say this is

our only Expense, Depreciation Expense was our only expense for the year.

for this example, so you have a truck, then you have a you have

Accumulated Depreciation 5,000 the parentheses is a negative so then you

have 25,000 in your fixed assets

ok, so you didn't touch the truck account. you just messed with the Accumulated

Depreciation account for the truck.

okay, so anyways this isn't going to be 80 any more, because you're 15 cash and

twenty-five thousand in fixed Assets, it's going to be 75,000 Fucking rough 7

huh ??

Damn, i am getting big boy !!!!

your net income because you had an expensive 5,000 this is going to change

15,000 doesn't Expense, it's going to lower your profit, your income, and that's

gonna change this to 75,000 So that's how you book a

Depreciation entry. PEACE !!!!!!!!!!