Journal Entry for Accumulated Depreciation on Equipment

Accumulated depreciation represents the total depreciation expense that has been recorded for an asset since it was put into use. It is a contra asset account, meaning it reduces the total value of the asset on the balance sheet. Below is an example of how to record accumulated depreciation for equipment.

Scenario:

A company purchased equipment worth ₹500,000. The equipment has an expected useful life of 10 years, with no salvage value. The company uses the straight-line method for depreciation. Therefore, the annual depreciation expense would be:

$\text{Annual Depreciation Expense} = \frac{\text{Cost of Equipment}}{\text{Useful Life}} = \frac{₹500,000}{10} = ₹50,000$

1. Recording Annual Depreciation Expense

Date	Particulars	Debit (₹)	Credit (₹)
2024-12-31	Depreciation Expense A/c	50,000
	To Accumulated Depreciation - Equipment A/c		50,000
	(Being annual depreciation recorded for equipment)

Explanation:

1. Depreciation Expense A/c is debited to recognize the expense for the period.
2. Accumulated Depreciation - Equipment A/c is credited to record the accumulated depreciation, which reduces the carrying value of the equipment on the balance sheet.

Adjusting Entry for Multiple Years

If the equipment has been in use for several years, the accumulated depreciation would be the sum of the annual depreciation expenses over those years. For example, if the equipment has been used for 3 years:

$\text{Total Accumulated Depreciation} = \text{Annual Depreciation Expense} \times \text{Number of Years} = ₹50,000 \times 3 = ₹150,000$

The accumulated depreciation after 3 years would be ₹150,000, which would be reflected as follows:

Date	Particulars	Debit (₹)	Credit (₹)
2027-12-31	Depreciation Expense A/c	150,000
	To Accumulated Depreciation - Equipment A/c		150,000
	(Being depreciation accumulated over 3 years)