Tangible assets that are long term or non-current usually require depreciation entries, What specific information is...

Tangible assets that are long term or non-current usually require depreciation entries, What specific information is required to make the period end adjusting entry? What is the adjusting entry for depreciation of non-current assets?

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Expert Solution

First, the company needs to decide which depreciation method they want to use in their books of accounts, on the basis of which further information required would be gathered. Various depreciation methods and the information required are:

1. Straight-line: Spreads the cost of the long term asset evenly over its useful life. Information required: Useful life, salvage value, cost of the asset.

2. Double Declining method: It is an accelerated method of depreciation which results in higher depreciation in the earlier years of asset's life. Information required: Useful life, book value of the asset at the beginning of the accounting period.

3. Units-of-production: It is used when an asset's value is more closely related to the number of units it produces rather than the number of years it is in use. Information required: total units to be produced, units produced in the current year, salvage value, cost of the asset.

Adjusting entry for depreciation:

Depreciation Expense-Non current asset Dr. xxx

To accumulated Depreciation-Non current asset xxx

ekkarill92 answered 1 year ago

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