Cara, Inc. purchased a building on January 1, 2014 for ₤ 800,000. The useful life of the building is 10 years. What impact will the appropriate adjusting entry at December 31, 2014 have on its statement of financial position at December 31, 2014?

Question

Quizplus · Accepted Answer

The appropriate adjusting entry for depreciation expense would be a debit to Depreciation Expense and a credit to Accumulated Depreciation. This entry would decrease the value of the building, a long-term asset, by the amount of depreciation expense for the year (₤ 80,000), resulting in a decrease in assets on the statement of financial position.

Cara, Inc Purchased a Building on January 1, 2014 for ₤