[Solve] Accumulated Depreciation In Balance Sheet

Welcome back to our website today we are going to solve accumulated depreciation in the balance sheet example so if you are learning accounting student then you should read this post till the end.

Why use Accumulated Depreciation in the Balance Sheet

Accumulated Depreciation is the most effective way to find the value of long-term assets like machinery, buildings, and more.

Example:- Imagine buying a new laptop for 1,000 rupees with an expected lifespan of five years. After one year, the computer is still functional, but it's not brand new anymore. Its market value might have dropped to 800 rupees so Accumulated depreciation reflects this decrease by recording 200 rupees as an expense. 

• The second use of it is to match the cost of assets with the revenue they generate.

These two are the main reasons to use Accumulated Depreciation in the Balance Sheet.

Accumulated Depreciation In The Balance Sheet

Now let's move to the balance sheet example:

ABC Ltd. Balance Sheet

• Assets

Account	Amount
Current Assets
Cash and Cash Equivalents	10,000
Accounts Receivable	5,000
Inventories	8,000
Total Current Assets	23,000
Non-Current Assets
Property, Plant and Equipment
Land	20,000
Buildings	50,000
Machinery	30,000
(Less: Accumulated Depreciation - Machinery)	(15,000)
Net Machinery	15,000
Total Property, Plant and Equipment	85,000
Investments	12,000
Total Non-Current Assets	97,000
Total Assets	120,000

• Liabilities and Shareholders' Equity

Account	Amount
Current Liabilities
Accounts Payable	4,000
Accrued Expenses	2,000
Total Current Liabilities	6,000
Long-Term Liabilities
Long-Term Loan	10,000
Total Liabilities	16,000
Shareholders' Equity
Common Stock	70,000
Retained Earnings	34,000
Total Shareholders' Equity	104,000
Total Liabilities and Shareholders' Equity	120,000

Conlcusion

Here in this post, we add an example of accumulated depreciation in the balance sheet so if you are trying to learn accumulated depreciation then you should read this spot till the end.