CENTURY 21 ACCOUNTING © Thomson/South-Western

LESSON 14-5LESSON 14-5

Planning and Recording Depreciation Adjustments

CENTURY 21 ACCOUNTING © Thomson/South-Western

2

LESSON 14-5

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 ofEstimatedUseful Life

÷Estimated Total

DepreciationExpense

$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)

CENTURY 21 ACCOUNTING © Thomson/South-Western

3

LESSON 14-5

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)

CENTURY 21 ACCOUNTING © Thomson/South-Western

4

LESSON 14-5

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

11

22

33

33

1. Write the debit amounts.

2. Write the credit amounts.

3. Label the adjustments.

CENTURY 21 ACCOUNTING © Thomson/South-Western

5

LESSON 14-5

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