The journal for depreciation

Depreciation is recorded with a journal at the year end. It uses two accounts.

Depreciation charge

an expense. It holds this year's depreciation and goes to the statement of profit or loss

Accumulated depreciation

it holds all the depreciation so far, and is set against the asset's cost in the statement of financial position

• Debit Depreciation charge
• Credit Accumulated depreciation

The asset's own account, such as Equipment at cost, is not touched. It stays at cost until the asset is sold. Each class of asset has its own accumulated depreciation account.