Journal Entry for Depreciation Reduction in value of tangible fixed assets due to normal usage, wear and tear, new technology or unfavourable market conditions is called Depreciation. Purpose of Journal Entry for Depreciation. Depreciation Journal Entry is the journal entry passed to record the reduction in the value of the fixed assets due to normal wear and tear, normal usage or technological changes, etc. Depreciation expense is debited for the current depreciation amount and accumulated depreciation is credited. The depreciation expense is then presented on the income statement as an operating expense and the accumulated depreciation is presented on the balance sheet as a contra capital asset account. Journal entry for depreciation depends on whether the provision for depreciation/ accumulated depreciation account is maintained or not. In each accounting period, part of the cost of certain assets (equipment, building, vehicle, etc.) The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation account (which appears in the balance sheet as a contra account that reduces the amount of fixed assets).
The main objective of a journal entry for depreciation expense is to abide by the matching principle. The purpose of the journal entry for depreciation is to achieve the matching principle. will be moved from the balance sheet to depreciation expense on the income statement. The depreciation journal entry records depreciation expense as well as accumulated depreciation.
where depreciation account will be debited and the respective fixed asset account will be credited.