LESSON 8-2
Calculating and Journalizing
Depreciation Expense
Straight-line depreciation method.
Adjusting entry for depreciation expense.
Calculating partial year depreciation.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
2
Chapter 8 Objectives
Accounting for Uncollectible Accounts
After studying Chapter 8, you will be able to:
 Define accounting terms related to plant assets and depreciation.
 Identify accounting concepts and practices related to accounting for plant
assets and depreciation.
 Journalize entries for buying plant assets.
 Calculate and record property tax expense.
 Calculate and record depreciation expense for a plant asset using straightline depreciation.
 Journalize entries disposing of plant assets.
 Calculate depreciation expense using other methods.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
3
Lesson 8-2
 straight-line method of depreciation: charging an equal
amount of depreciation expense for a plant asset in each
year of useful life
 book value of a plant asset: the original cost of a plant
asset minus accumulated depreciation
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
4
STRAIGHT-LINE DEPRECIATION
–
=

=
Original Cost
Estimated Salvage Value
Estimated Total Depreciation Expense
Years of Estimated Useful Life
Annual Depreciation Expense
Year 3
page 230
$2,000.00
– 175.00
$1,825.00

5
$ 365.00
Beginning Book
Value
–
Annual
Depreciation
=
Ending Book
Value
$1,270.00
–
$365.00
=
$905.00
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
5
RECORDING DEPRECIATION ON
PLANT ASSET RECORDS
1
2
page 231
3
1. Calculate annual depreciation expense.
2. Calculate accumulated depreciation.
3. Calculate ending book value.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
6
JOURNALIZING ANNUAL
DEPRECIATION EXPENSE
page 232
Depreciation Expense—Office Equipment
Dec. 31 Adj.
11,571.00
Accumulated Depreciation—Office Equipment
Jan. 1 Bal.
Dec. 31 Adj.
Dec. 31 Bal.
37,434.00
11,571.00
49,005.00
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
7
CALCULATING DEPRECIATION
EXPENSE FOR PART OF A YEAR

×
page 232
Annual Depreciation Expense
$ 120.00
Months in a Year

12
Monthly Depreciation Expense
$
10.00
Number of Months Asset Is Used
×
5
Partial Year’s Depreciation Expense
$
50.00
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
8
DEFINE TERMS REVIEW
In Quizlet
page 234
Edit this set: Chapter 8 AdvAcc (then SAVE)
 straight-line method of depreciation
 book value of a plant asset
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
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Exit Ticket for today:
Audit Your Understanding 8-2
In a Word Document, SaveAS: Chapter8-2AYUYourName
And drop in my Inbox today!
1. To match revenue with the expenses incurred to
earn it, the cost of a plant asset should be allocated
to an expense over what period of time?
2. Which accounting concept is being applied when
depreciation expense is recorded for plant assets?
3. Why is annual depreciation for land not recorded?
4. What three factors are used to calculate plant
asset’s annual depreciation expense?
5. What is the smallest unit of time used to calculate
depreciation?
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2
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Complete the following assignments for
Chapter 8-2 today
 Define Terms Review on page 234.
 Answer Audit Your Understanding questions on page
234.
 Complete Work Together 8-2 on Aplia – page 234.
 Complete On Your Own 8-2 on Aplia – page 234.
 Complete Application Problem 8-3 on Aplia – page
251.
 Complete Application Problem 8-4 on Aplia – page
252.
CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning
LESSON 8-2