Typical Transaction 21
Example: Apply additional depreciation charge of 20% on Fixed Assets in Year Four Balance Sheet
The Balance Sheet Year Four will be used in this example to increase the depreciation expense of 20% of Fixed Assets over the previous depreciation charge in the existing Balance Sheet
Accounting procedure is as follows:
> First, in TT21 enter depreciation rate, 20%, in field ’At the Rate of’: 4,840
> Second, click “Apply Change”.
Accounting procedure is as follows:
> First, in TT21 enter depreciation rate, 20%, in field ’At the Rate of’: 4,840
> Second, click “Apply Change”.
The entries for this transaction in the Accounting System can be seen here, in the AccountingLab and in the Accounting System, Operation O97C, Y1:
| First year Depreciation of Fixed Assets | Decrease in Fixed Assets (-) |
|---|---|
| Decrease in Retained Earnings (-) |
> Credit entry Fixed Assets balance decreases by 4,840
> Debit entry Retained decreases by 4,840
> Values in red show Balance Sheet values before and after changes
> Debit entry Retained decreases by 4,840
> Values in red show Balance Sheet values before and after changes
| Balance Sheet | ||
|---|---|---|
| Original | After Changes | |
| Assets | ||
| Current Assets | 1’679,483 | 1’679,483 |
| Bank | 1’618,983 | 1’618,983 |
| Debtors and Prepayments | 60,500 | 60,500 |
| Other Current Assets (Stock) | 0 | 0 |
| Fixed Assets | 24,200 | 19,360 |
| TOTAL ASSETS | 1’703,683 | 1’698,843 |
| Liabilities | ||
| Current Liabilities | 588,660 | 588,660 |
| Creditors | 400,000 | 400,000 |
| Accruals | 188,660 | 188,660 |
| Long Term Liabilities | 0 | 0 |
| Long Term Loan | 0 | 0 |
| Equity | 1’115,023 | 1’110,183 |
| Shareholders’ Equity | 760,383 | 760,383 |
| Income Statement | 354,640 | 349,800 |
| TOTAL Liabilities + Equity + Retained Earnings | 1’703,683 | 1’698,843 |