Answered: Why is depreciation on the income…

Business

Accounting

Why is depreciation on the income statement different from the depreciation on the balance sheet?

Century 21 Accounting General Journal

11th Edition

ISBN:9781337680059

Author:Gilbertson

Publisher:Gilbertson

Chapter16: Financial Statements And Closing Entries For A Corporation

Section16.1: Preparing An Income Statement

Problem 3AYU

See similar textbooks

Related questions

Q: The recognition of income occurs simultaneously with the recognition of decrease in assets or…

A: Income is recognized in the books of accounts of an entity if the value of assets is increasing, or…

Q: What is Accounting Depreciation?

A: Definition: Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on…

Q: How does accrued but uncollected revenue affect the balance sheet?

Q: Is depreciation a permanent account or temporary account? Explain?

A: Depreciation refers to the process of allocating the total cost of an asset (except land) to expense…

Q: Define the term Accounting for Depreciation?

A: Depreciation: It is the reduction in the value of an asset due to factors like normal usage or…

Q: Why are owners interested in the income statement?

A: Introduction: An income statement is a vital part of financial statements. It displays the net…

Q: How can the Gains and Losses on Depreciable Assets be determined?

A: For calculation of gains or losses on depreciable assets, written down value of the assets at the…

Q: Describe the depreciation procedures used in income taxation

A: The question deals with the depreciation procedures used in income taxation.

Q: On a company's balance statement, why are fixed assets depreciated?

A: Fixed asset: It can be defined as a tangible asset that is used by the business in its production…

Q: Is it possible for costs such as salaries or depreciation to end up as assets on the balance…

A: Balance sheet: Balance Sheet is one of the financial statements that summarize the assets, the…

Q: The depreciation expense is generally estimated based on some assumption such as percentage of sales…

A: Depreciation can be defined as the reduction in the value of the asset over a period of time due to…

Q: What is the total loss on realization of assets?

A: Loss that is recognized when the assets are sold for a price is lower than the original purchase…

Q: Describe accounting for depreciation of fixed assets?

A: The depreciation is the reduction in the value of fixed assets with the usage and passage of time.

Q: What is the relationship between depreciation and net income?

A: Depreciation is the part of cost of a asset which is charged to income statement yearly as a expense…

Q: How does the income statement differ from the balance sheet withregard to the time period reported?

A: A balance sheet is a statement which provides financial data related to the assets, liabilities and…

Q: What is the term for allocation of fixed assets to expense? * O bad debts expense O depreciation…

A: Introduction: Fixed Assets: The benefits from the assets are having more than one year called as…

Q: Explain why depreciation expense is added back to net income and why an increase in inventories is…

A: A Cash flow statement is a financial statement that provides summarised information regarding cash…

Q: What are the different types of accounting depreciation and their primary purposes?

A: Methods of Depreciation: Depreciation refers to the reduction in the monetary value of a fixed asset…

Q: Why depreciation on fixed assets is not recorded in receipts and Payment Account?

Q: In the recording of depreciation expense, which account is credited?

A: Depreciation expense: Depreciation expense is a non-cash expense, which is recorded on the income…

Q: How do you treat net loss on a balance sheet?

A: Balance sheet: It refers to a financial statement that shows all the liabilities, assets, and…

Q: Explain the term Treatment of Depreciation Expenses?

A: Depreciation is a charge calculated on the value of fixed assets, based on normal wear and tear due…

Q: what type of account accumulated depreciation? and depreciation expense is and on what statement…

A: Accumulated depreciation is the total depreciation allocated to asset since the asset was used.…

Q: What are the differences between assets and expenses

A: Definition of Assets: Properties or things owned by business

Q: On a balance sheet, why are fixed assets depreciated?

A: Fixed assets are recognised at net carrying amount after deduction of depreciation expense for the…

Q: Are the amounts at which fixed assets are reported on the balance sheet, their approximate market…

A: Fixed assets include all those assets which are not purchased for resale purpose. Fixed assets are…

Q: Which of the following is used when computing for the accounting rate of return (ARR)? a. Income…

A: The accounting rate of return is the average net income an asset is expected to generate on the…

Q: How do accrued but unpaid expenses affect the balance sheet?

A: Accounting: Accounting is a system, or a process of collecting and organizing economic transactions,…

Q: Est-ce que certains expenses, like salary or depreciation, may become assets? Explain

A: In accounting, the balance sheet is one of the financial statements that summarizes a company's…

Q: What is the return on total assets given the figures attached?

A: Return on total assets is the comparison of operational income with that of the total assets. It…

Q: Is depreciation expense closed? If so, is it closed to income summary like the other expense…

A: Depreciation Expenses It's crucial to think about how long assets will keep worth as well as how to…

Q: What is the difference between assets and expenses?

A: Assets and expenses are two different elements of the financial statements of an entity. Assets…

Q: Why do expenditure accounts have debit balances if assets are valued resources and asset accounts…

A: The Answer

Q: What is the difference between Accumulated Depreciation and Depreciation expense? What statements…

A: Accumulated Depreciation is a contra asset, it consists of the accumulated depreciation value since…

Q: Describe the accounting changes in depreciation.

A: Accounting Changes: Accounting changes can be described as a process of change in accounting…

Q: What is the major distinction (a) between revenues and gains and (b) between expenses and losses?

A: The major distinction between revenues and gains (or expenses and losses) depends on the typical…

Q: How does accrued but uncollected revenue affect the bal-ance sheet?

A: Accrued revenue: It can be defined as the revenue that has already been earned by the business but…

Q: In financial accounts, what is the point of include depreciation as an expense?

A: Depreciation is an accounting method for allocating the cost of a tangible or physical asset over…

Q: Which are the total interest expense in the statement of profit or loss?

A: Interest expense is the finance cost which is deducted from operating profit i.e. earnings before…

Q: How does depreciation expense differ from other operatingexpenses?

A: Depreciation: It refers to a gradual decrease in the fixed asset’s value because of obsolescence,…

Q: Describe the method of Accounting for Depreciation and Income Taxes?

A: Generally Accepted Accounting Principles (GAAP): Generally Accepted Accounting Principles are the…

Q: Can stright line depreciation method be used to manage earnings. Explain

A: A depreciation expense reduces net earnings when the asset's cost is allocated on the income…

Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

Why is depreciation on the income statement different from the depreciation on the balance sheet?

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Accumulated Depreciation, Equipment is reported a. on the income statement as an expense. b. on the balance sheet as an addition to total assets. c. on the income statement as a revenue. d. on the balance sheet as a subtraction from the related asset account.
Expenses represent outflows of assets or increases in liabilities as a result of efforts to produce revenues.
Asset Valuation and Income Recognition. Asset valuation and recognition of net income closely relate. Explain, including conditions when they do not.
Define current assets and current liabilities. Why are current assets and current liabilities separated from noncurrent assets and long-term liabilities on the balance sheet?
Which of the following is a measurement of earnings that represents the profit before interest, taxes, depreciation and amortization are subtracted? A. net income B. retained earnings C. EBITDA D. EPS
If a company capitalizes costs that should be expensed, how is its income statement for the current period impacted? A. Assets understated B. Net Income understated C. Expenses understated D. Revenues understated
On which financial statement would the Accumulated Depreciation account appear? A. Balance Sheet B. Income Statement C. Retained Earnings Statement D. Statement of Cash Flows
What is the effect on the current period income statement and the balance sheet when inventories are written down using the lower of cost or market method? What is the effect on future period income statements and balance sheets?
In financial accounts, what is the point of include depreciation as an expense?