The adjusting entry to allocate the cost of a plant asset such as equipment involves a credit to:

Question

Quizplus · Accepted Answer

The adjusting entry to allocate the cost of a plant asset such as equipment is to record depreciation expense, which is the allocation of the cost of the asset over its useful life. The credit should be to Accumulated Depreciation, which is a contra asset account that is used to accumulate the depreciation recorded for the asset over time. This account appears on the balance sheet and reduces the value of the asset, reflecting the fact that the asset has been subject to wear and tear and is no longer worth its original cost.

The Adjusting Entry to Allocate the Cost of a Plant