DEPRECIATION BASICS! With Journal Entries

[@AccountingStuff]

What should we cover next?? TIMESTAMPS 00:00 - Intro 00:29 - What is Depreciation? 01:09 - Why do we Depreciate? 01:11 - Accrual Method of Accounting 01:43 - Adjusting Entries Definition 02:03 - How does Depreciation work? 02:21 - Capitalization Definition 02:43 - Depreciation Methods 03:39 - Depreciation Schedule 04:01 - How to record Depreciation using Journal Entries 04:05 - Journal Entry Definition 04:11 - DEALER (Accounting Acronym) 04:43 - How to Capitalize an Asset 06:28 - How to Record a Depreciation Expense using Journal Entries 08:03 - Contra Asset Definition 10:36 - Clearing Journal Entry

[@r.a.p.h4481]

While we are in the kitchen anyway - how about cooking the books?

[@ibu673]

Hi James, Can you post a detailed video on Investments in Equity & Debt Securities? Great channel btw. Thanks!

[@PROEKT_13]

BAD DEBTS AND PROVISIONS FOR THEM !!!!!!!! God, i dont really understand this topic( Please James, i'd REALLY appreciate it

[@hley1986]

Please cover gain or loss on disposal

[@princewokeh4942]

Public finance

[@bman6751]

Sitting in college for 4 years and I've learned more in 2 videos than my entire time here. I am almost positive they over complicate text books.

[@mistermystery819]

They do and Infact since I have been watching his Vids I have surpassed my Books so to say and Aced EVERY test I dont even study from my books anymore.

[@sapsalingpusacattalkmaykwe1556]

Wow hoping to ace mine too. With this tips here i almost perfect mine.

[@marthadelossantos3918]

You ARE Amazing, Cool and SO INTELLIGENT💯Every subject with your invaluable explanation comes to be a piece of cake!🤗🙋‍♀️

[@thedekunutt8982]

It's because colleges have the wrong incentives. Accounting Stuff needs to make engaging interesting videos that have value in order to keep you here. Colleges already have your money and don't care about making the material engaging. It's a big reason why our education system is broken.

[@omidfarhad1685]

[@mo-ju4zk]

Hey man, i just wanted to say thank you, REALLY. i passed my exams while i was really late in my revisions thanks to your videos.

[@AccountingStuff]

Hey Mohamed, that's fantastic news. Congratulations!

[@silentkidd8882]

I'm late in my revision right now dwl

[@sapsalingpusacattalkmaykwe1556]

Wow congrats

[@aarontaylor6464]

Be honest who has told their professors that YT- James, Accounting Stuff content had help them to better understand accounting than their confusing course materials? ✋

[@blast2686]

This is probably the best intro on KZbin I've ever seen

[@AccountingStuff]

Thanks buddy, I'm glad you enjoyed it!

[@a_la_mads]

Is it just me or does Accounting make more sense when explained in an English accent.... lol fr thx for sharing these informative & concise vids

[@amandajennings8726]

Yes please, cover P&L on disposal of assets...that would be really helpful to me. Thank you!!

[@AccountingStuff]

Cheers Amanda!

[@kishangohil8089]

Yes please cover disposal and parts exchange of assets! Thanks

[@patrickrussell4380]

Yes please!

[@SycoVFX]

Did u guys find anything for disposal and trade-in?

[@mulalondadza1148]

You are one of the best accounting tutor ive seen in KZbin.... mostly due to the amount of work u put in your videos, i know it takes a lot of hours just for 5 minutes video with that i truly appreciate your talent..... THANK YOU SO MACH 🙂🙂🙂🙂🙂🙂🙂🙂I TRULY ENJOY ALL YOUR VIDEOS...

[@AccountingStuff]

Thanks Mulalo, that's kind of you to say. Yes the videos take a long time to put together. But if people find them useful then it was worth it :)

[@willjackson6202]

Dude I appreciate you making these so much man. Phenomenal pace, enunciation, simple explanation, appreciated hours of editing (I can tell, mate :)) and this is so helpful for my class. You are a blessing thank You so much

[@AccountingStuff]

Cheers Will! Glad you enjoyed it!

[@jennymulhall816]

I’m about to sit my first year financial accounting exams in two weeks and your videos and cheat sheets have really helped me wrap my head around some really complex (to me, anyway) accounting concepts. Thank you very, very much, James! ❤️

[@AccountingStuff]

No worries Jenny, best of luck! Hope you ace them

[@yasinhashim786]

Y don’t u apply as a teacher at my school

[@dhirajshetty483]

it took me 3 days to fathom on my own what you sorted out in 11.23 mins ! thank you for the superb video ! for an Audio Visual learner like me your videos are a Godsend ! could you please teach us Disposal accounts too !

[@AccountingStuff]

Great to hear it's making sense! Thanks for your request :)

[@bedokhaled9628]

A video about the different branches of accounting and the objectives of each one please, will be super helpful

[@AccountingStuff]

Hey Bedo, thanks for your suggestion :)

[@manochasurbhi2010]

Hey James, I am from a non-commerce background and going to start my MBA soon :) All your videos are super helpful and clear ! Hats off. As a suggestion-Could you please cover the topic of 'Bad Debt Expense' - How to set up allowances, effect on both sides of balance sheet, how to write off, etc.

[@AccountingStuff]

Hey Surbhi, thanks for your suggestions! Good luck with your MBA. I hope it goes well :)

[@medinalunger2759]

Please cover Gains/Loss that would be amazing!! Your videos help me out a lot and my classmates. Especially since we are all working online now instead of in school setting. Your breakdowns are awesome. Would you consider adding to depreciation series by adding something about when estimated depreciation changes after a year or two within the useful life and needs to be accounted for?

[@AccountingStuff]

Thanks for your suggestions! It must be tough studying from home. All the best

[@seven5522]

You didn't cover disposal gain or loss😭...

[@atheeqcader6871]

i don't understand why we should create another accumulated depreciation account,,,cant we just record that in the baking equipment account???

[@atheeqcader6871]

pls make a video on asset disposal as well

[@piyushmisra1812]

I'm trying to clear CPA 5 years after finishing college. My current job has very little to do with accountancy. I had to start from the very beginning and I fortunately found your channel! You have no idea how useful and just fun these videos are to me :) Many thanks!

[@AccountingStuff]

Good luck! You must be getting close now

[@tusharkana5424]

that"s awesome james! very comprehensive introduction on depreciation.

[@AccountingStuff]

Cheers Tushar!

[@malihamaliha2928]

Thanks a lot for your videos. It helped me a lot! Keep it up ^^

[@AccountingStuff]

Cheers, will do :)

[@miked0bb0]

Great videos, keep them coming please!

[@AccountingStuff]

Cheers Mike!

[@cdgarzon1]

Yes! please cover the case when there is a gain or loss at the end of the asset useful life. These videos are amazing 👏 Thank you

[@AccountingStuff]

Cheers for your request!

[@roshanghadigaonkar8267]

Can you please also make an video on branch transfer of inventory.. I am literally confused in those things

[@AccountingStuff]

Heya Roshan, thanks for your suggestion

[@urvashiwakode9515]

Hello James brother I am a commerce student studying in class 11 and I have watched all of your videos it's super useful for me. Thank you so so much for all this information 😊 can you please make a video on different branches of accounting what are their uses and how they work ? It will be very helpful thank you. Love from India 🇮🇳 ( sorry for my bad English this is not my first language )

[@AccountingStuff]

Hey Urvashi, thanks for your suggestion! Your English is great

[@Abdullahs_World]

Excellent way of explanation!

[@Roblox_Raya877]

Hi, you are making great videos! Please continue with the gain or loss on disposal, revaluation of an asset and also please consider posting a video about different accounting periods-like year end, financial year and company's year end. Many thanks

[@AccountingStuff]

Thanks for your requests!

[@nafiskhan8801]

Best channel for study help

[@DavidetaraborrelliIt]

Your videos are fantastic, thank you for making them! I can appreciate how depreciation works (pun definitely intended) and how to do the entries in the journal. But what are the adjustments we need to do in the balance sheet? Thank you if you'll answer my question :)

[@vaibhavbhatnagar9188]

Please cover what happens when the asset is sold for a profit/loss! Love your videos by the way!

[@AccountingStuff]

Thanks for your request!

[@markopolo4219]

Is it difficult to get into the top 4 accounting firms in the UK (PWC, Deloitte, EY and KPMG).

[@AccountingStuff]

Hey Marko, yes it is quite difficult to get into the big 4

[@markopolo4219]

@@AccountingStuff I want to apply but it looks like you have a 5 percent chance or less of getting in :(

[@maverickacres399]

I just found your channel and I'm about binge watch like I did the Walking Dead. Your videos are clear and well organized, and time stamps too. Wish I found this years ago.

[@chrisrobbins3888]

These videos are so good that it’s making me interested in accounting as a non-accountant. That’s very powerful. Great job mate.

[@AccountingStuff]

Cheers Chris, glad you're enjoying them!

[@heptix6591]

Great video as always. Can you please make a video on reconstructing allowance for doubtful debts accounts and how it interacts with bad debts and doubtful debts in ledgers & journal entries? Keep up the good work.

[@AccountingStuff]

Thanks for your suggestion!

[@TheRobbo007]

Incredibly informative, educational, relatable and fun to learn! More please?!

[@AccountingStuff]

Cheers bud! Plenty more coming soon :)

[@blast2686]

Can you make a video about all the accounting stuff that takes place in a Not For Profit Organisation(NPO). For eg Receipts and Payments A/cs and Income and Expenditure Account

[@AccountingStuff]

Cheers for your suggestion!

[@jennymulhall816]

Oh! I second the motion! ☝🏻

[@lakshaystyles8985]

hey man! please make a video on the gain/loss on disposal. thank you so much. and btw what video editing software do you use?

[@AccountingStuff]

Cheers for your suggestion! I'm using FCPX

[@lakshaystyles8985]

@@AccountingStuff do use any audio editir too?

[@AccountingStuff]

@@lakshaystyles8985 I do my audio in FCPX as well

[@IggyPelman]

Hey James. A vid on making a gain or loss on asset disposal would actually be quite useful. Plus, what asset disposal entries do you make when depreciating a capital asset with a residual value?

[@AccountingStuff]

Thanks for your request!

[@theobellash6440]

Being based in Afrika, where OHADA rules accounting practices, CAPITALIZATION will not directly credit the CASH! One should involve the INVESTMENT VENDOR who supplied the tangible asset. Cash is paid to the vendor Temporary Tangible Asset increases when the vendor delivers the asset We’ll definitely debit the asset only when the fixed asset is used for the first time (capitalization)

[@itsqueenshepherd4762]

Thank you for this. Appreciated 🧡

[@AccountingStuff]

Thanks!

[@jacksingarajah]

please cover disposal of assets. thank you

[@AccountingStuff]

Cheers Jack!

[@animemusic8776]

Hey. Can you do a simple tutorial on Financial Instruments please? I need help for my exams #help .

[@AccountingStuff]

Thanks for your suggestion!

[@zamf]

Hi James. I was wondering about something related to depreciation. If you buy some equipment in July and the end of your accounting period is 31 December do you incur your depreciation expense for the whole year or just for the 6 months of using the equipment. Assuming we're not using the units of production method. Or, to put it in another way, if your depreciation expense is $1000 a year but you've been using the asset for 6 months, do you incur $500 of depreciation or $1000. Also, what happens if you buy the asset on 30 December? Thanks again for the great videos and the useful information.

[@charlieshepperd5068]

4:42 Very helpful video, but I'm confused with the DEALER acronym. It all makes sense apart from the direction the arrows are pointing, shouldn't they be pointing the other way?

[@Mountain-Sam]

Hi! Does this mean you can’t write off the full $8,000 expense for tax purposes if you only expense $800 per year? Is there a way to write off the full amount using the accrual method? That seems like a disadvantage to the cash method if so. Thanks for your help!

[@Diamond21192]

Hi formula OC/years*%=8000/10*10%=800 SL Metod. am l correct??? Show me DDM formula???🇪🇹🇪🇹🇪🇹

[@gordwilkes]

These videos are on point... I really appreciate the effort put into the production of these videos. I'm new to bookkeeping and I've use several videos as a helpful resource for some coursework I'm presently doing in a bookkeeping program... Thank you.

[@AccountingStuff]

No worries, best of luck with your coursework! Hope it's going well :)

[@omg7596]

Your videos are amazing and it helps with my accounting igcses. Would u plssss make video about irrecoverable debts and provision for doubtful debts. Please

[@seharlicious010]

Kindly jamez do this as soon as possible coz I've an exam on 5th of july.. 1.plants and intangible assets 2.accounting for corporation

[@Carnaqy6224]

For those wondering why we dont depreciate straight from the PPE and account. WHen making your financial reports PPE will not be affected by the depreciation no real reason given @7:12

[@bethleliefeld1327]

How do you keep track of all of your monthly adjusting entries? I just watched a video where you monthly made entries for water usage, now you are making a monthly entry for the oven. I imagine there could be many more. Without the accounting 'trigger', how do you know what needs to be done?

[@joschoonmaker3868]

I HAVE A QUESTION. I AM A BOOKKEEPING STUDENT AND I HAD TO DO A FICTITIOUS BOOKKEEPING FOR A COMPANY. I TURN IN MY WORK AND I GOT THE ACCUMULATED DEPRECIATION WRONG. SO, I NEED TO KNOW IF YOU ALREADY HAVE A EQUIPMENT ACCOUNT WITH A 3 YRS SCHEDULE AND YOU BUY A NEW EQUIPMENT AFTER THE EXISTING ACCOUNT 3 YR SCHEDULE IS HALFWAY DONE. WHAT DO YOU DO? dO YOU COMBINED THE SCHEDULE OR HAVE TWO SEPARATE SCHEDULE? i DID TWO SEPARATE SCHEDULE WITH THE 3YR SCHEDULE START AT THE TIME OF PURCHASE. THEN COMBINE THEM TOGETHER. DID I DO IT RIGHT OR WRONG? IT DOESN'T EXPLAIN IN MY BOOK AND I CAN'T FIND AN ANSWER ONLINE. NO ONE EVER SAYS ANYTHING ABOUT WHEN YOU HAVE ALREADY AN EXISTING SCHEDULE ON THAT ACCOUNT. WHAT TO DO? MAYBE I AM MAKING A MOUNTAIN OUT OF ANTHILL BUT I WISH YOU COULD EXPLAIN THAT, PLEASE. I AM SURE THAT A LOT OF PEOPLE BESIDES ME HAVE THIS QUESTION. I LOOKED OVER 10 DIFFERENT VIDEOS AND NO ONE EVER MENTIONS IF YOU ALREADY HAVE A SCHEDULE FOR THAT ACCOUNT. PLEASE HELP, THANK YOU.

[@RhettTheDungeonMaster]

I just did this in a section of my financial accounting class at WGU and I got whacked on a few questions because I couldn’t visualize the debits and credits right in the questions, I got the math right but I felt dumb over whether or not to debit or credit an “accumulated depreciation” account

[@OmarAl93]

thanks a lot for the incredible videos, it makes accounting more fun for sure. How should we balance the cash account with asset account in the first year, assuming there's a residual value for the asset. Do we credit cash with the same amount we debit the asset account (Historical cost - accumlated depreciation)?

[@kevv.1912]

In here, they don't use accumulated depreciation account but rather directly depreciation from long assets accounts so it's fun to see these differences. I'm taking this assumption with me while watching the video since i know straight line method is same everywhere

[@rosyk5549]

Thank you, Thank you, Thank you! My accounting course became way easier since watching your videos. Would love to see a video on disposing of assets along with the journal and ledger entries. Also got all the cheat sheets and they are so helpful. Keep up the great work! :)

[@AccountingStuff]

Hey Rosy, thanks for your request and cheers for your support! All the best in your course :)

[@yiklongtay6029]

Are there any disadvantages of not using depreciation methods on my fixed assets? (Besides paying more tax due to lower expenses)? It seems like a painful amount of work. Not work per say but it will take a lot of effort to keep it up without forgetting or inserting human error

[@RhettTheDungeonMaster]

Okay are contra accounts liability accounts? My courses don’t tell me these things lol it’s kind of frustrating, I’m a visual learner but they hand me little to visualize

[@sophiabrown8573]

I have a question: Why accumulated depreciation? We can directly debit depreciation expense and credit equipment and close the entries for the current accounting period....

[@SeveralToast]

Hey James, is this GAAP or IFRS? I know the basics are very similar but are there any differences for intro items like this?

[@bmc1222]

Curious, why did you make the journal entry for the banking equipment as a credit to cash and then a debit to banking equipment ? I thought debits are done first and then credits after.

[@lauralau2257]

I’m struggling to see what the point of this is? It seems incredibly long .. I’m missing something 🙈🙈 HELP!

[@BH_Restorative_fitness]

how do you find the useful life of an object? For example if I buy the newest Ipad from apple for business. I need. to depreciate it for what ever reason how do I find the useful life of the Ipad.

[@partharora77]

Another awesome video! Just purchased your cheat sheet bundle! Looking forward to the revision now! Thanks!!

[@AccountingStuff]

Hey Parth, cheers for your support! I hope you find the cheat sheets helpful. All the best with your revision!

[@gatorhenry3]

I love your videos. They have really helped me study for my competency exam that I have to take in July because I’m transferring to Florida State as a junior this fall as an Accounting major. I think Accounting is my true calling. I have a love for money and how it’s used and tracked in a business. It’s just fascinating to me. KEEP UP THE INFORMATIONAL CONTENT BROTHER!!!!

[@AccountingStuff]

Thanks, it's great to hear that you're finding them useful. Best of luck with your exam! Hope the move goes smoothly

[@deanderksen3455]

Definitely need that video explaining how the gain/loss of a sale affects the cash flow statement!

[@AccountingStuff]

Cheers for your suggestion!

[@sapsalingpusacattalkmaykwe1556]

02:58 this is our topic last week. Ty. I know I can count on your channel.

[@Nathan-vn5tg]

Love this channel. Helping me a lot on my road to accountancy.

[@AccountingStuff]

Cheers Nathan, all the best!

[@europa6497]

I am very thankful to you. I am from India and preparing Chartered accountancy course. I found your videos very helpful in understanding basic concepts of accounting.

[@AccountingStuff]

No worries Shreyash! I'm happy to help. Best of luck in your course, hope it goes well :)

[@IceyJunior]

Hey can you also do adjustment videos for other stuff? Like rebate, suspense accounts, etc.

[@BusyBee-en3gx]

Please show me the calculation on the Accumulated at End when depreciation exceeds the cost on one of the vehicles

[@christosantonopoulos2018]

depreciation is just a poor man's excuse and con job to get something of value for nothing. So don't get scammed

[@ashleyguaman3145]

I've been so lost with deferrals for the past week and THIS video made it so much easier to understand. THANK YOU SO MUCH!!!! :')

[@AccountingStuff]

No worries Ashley, you're welcome :)

[@ms12earth]

Hey, I just wanted to say that you are one of the best educational KZbinr. I love your videos. Your videos are soo interesting, like the connnttrrraaa aaassseeettt

[@AccountingStuff]

Thanks!

[@ms12earth]

@@AccountingStuff No problem. As a KZbinr myself, I love your videos. My Channel name is MS12 Earth

[@Countrycharm17]

Thank you so much James! As a visual learner your style of teaching with the graphics is just amazing! Subbed and will be watching more of your great videos!

[@AccountingStuff]

Cheers Carol! Great to have you on board :)

[@Countrycharm17]

@@AccountingStuff Thanks James! I just purchased the all in one cheat sheet and am working on depreciation. As a creative, accounting hurts my brain! I'm determined tho😁

[@LukaszZKrakowa]

Great job, thank you! Please cover also in the next video the topic you've mentioned at the end - selling of the the depreciated assets.

[@AccountingStuff]

Cheers Lukasz!

[@farrukhsami7851]

Sir no need transfer depreciation into and l account please reply P and l. Ac Dr. To. Depreciation Ac

[@syedfarooqkamal409]

That's really helpful, kindly make video on this.

[@halliganman5500]

I don't know if I am just very stupid but this did not help I need to know how to do the t accounts

[@thetechrealms7824]

11:04 Yes, please make a video on that

[@realisticmystic444]

Do you enter the depreciation schedule all at once, or each year as you create the new budget?

[@sahartheartist]

Thanks much ☺️ I've been asked about it on my last interview

[@AccountingStuff]

Hope your interview went well!

[@BeckySaifMusic]

I'm so glad I found you!

[@LejoVideosCathyDC]

Hi how does the animation of excel lines and items show like in the video? How to make those animations?

[@YokeeYang]

The last words were great pronunciation ,Xie Xie!😁

[@catiagm83]

Watching your video I realise how useless and complicated my accountancy books are. You make it so simple and easy to follow and by the end of the video I totally understand what depreciation is and the journals. You are amazing! You gained a new subscriber! Carry on like this as you are doing a great job and thank you very much!

[@AccountingStuff]

Great to hear you're finding these useful :)

[@수영-e6x]

book value = carrying amount cash method 2:12

[@tiburon88]

Thank you! You're a great teacher. I'm really starting to grasp adjusting journal entries. I appreciate you added the asset disposal to bring it full circle. I'm going to try and find your video about selling the fixed asset.

[@AccountingStuff]

Glad you found it useful!

[@seven5522]

We need easy to understand videos on consolidated statement. Love your content btw

[@christianpetersen1782]

Hello James, I’m a new subscriber to your excellent vlogs. I’m a volunteer treasurer for our small residents assn. in the uk. it’s so small it’s classified as a micro-entity!. 15 neighbours pay by bank transfer into our bank a/c. We have only 5 cost categories. No debtors and no creditors. A simple balance sheet only for reporting to Companies House. I keep a record of my stationery expenses etc and get paid after the financial year end. If I enter my expenses, say £100.00 to the (last year’s) balance sheet to reduce the available funds but the payment goes though the bank after that financial year-end, what adjustment would I make the following year so I don’t count the £100 both years? I’m sorry this is such a simple question for you but it’s puzzling me! Thanks.

[@AccountingStuff]

Hey Christian, are you cash accounting or accrual accounting? If you are cash accounting then you would record the transaction when the payment took place. But if you are accrual accounting then it would need to be recorded when your expenses took place.

[@MrOdsplut]

What's the advantage of crediting accumulated depreciation rather than baking equipment?

[@AccountingStuff]

It helps us track initial asset costs and depreciation separately.

[@vegaswoman7020]

Your Killing me James!!😫😣📉💰

[@hamzali84]

thanks bro... really appreciate it. been trying to do accounting for wife's company and this is a life saver. everytime i learn something new in accounting, i always thought why didn't i think of this before.

[@AccountingStuff]

Glad I could help :)

[@talksonabox]

But do you depreciate the cost of the oven or the cost of the oven plus the sales tax when buying!

[@AccountingStuff]

The cost of the oven

[@stanleyabbew3602]

Please do you have videos on cashflow preparation?

[@markopolo4219]

Could you work as an Auditor and then move onto something like a Financial manager (also known as Bank manager or city comptroller). Looks like something I'd love to do in the future.

[@AccountingStuff]

Hey Marko, a lot of Auditors move into private accounting as financial accountants / controllers / managers

[@markopolo4219]

@@AccountingStuff Interesting, thank you for the response

[@deathmoon005]

Please include more advanced questions as anyone with principles of financial reporting knowledge can answer these. I would say stocks/bonds/leases

[@AccountingStuff]

Thanks for your request :)

[@xoxCynnaminkissesxox]

I have tried to follow this, and I started to cry .. i think i was traumatized when I took accounting 1 and trying to relearn it just makes me instantly frustrated and cry, lol I am not cut out for this type of work... but thank you for trying to explain this xD

[@AccountingStuff]

Sorry to hear that you're having a tough time with this. Keep on practicing and I'm sure that things will click for you

[@sapsalingpusacattalkmaykwe1556]

Have to watch this all over since we just only have limited time. Our online class is quite tough but this video and all is very helpful.

[@thuhuyenbui8889]

Thank for your videos. They really helpful to me. But this video i think cost to charge depreciation after minus estimate disposal of asset. And i really expect your other depreciation case videos, as: sold tangible asset, change rate depreciated, assessment asset...

[@AccountingStuff]

Hey there, I left out residual value in this one but I cover it in my other videos.

[@tylercotterill2581]

I've just finished watching this video, did you end up making a video about what happens if you sell the oven during or after it has been depreciated, and if made gain or loss? I would really like to watch it.

[@AccountingStuff]

Thanks for your request!