When a company recognises a depreciation credit resulting from a review of the estimated residual value of a depreciable asset, the depreciation debit should be recognised in accumulated depreciation and the depreciation credit should be recognised:

Question

Quizplus · Accepted Answer

The depreciation credit should be recognised in the depreciation expense account, which will reduce the overall depreciation expense for the period. This approach maintains the matching principle, as it reduces the charges to expense for the period based on the revised estimate of residual value. Choices A, C, and D are not appropriate, as they do not follow generally accepted accounting principles.

When a Company Recognises a Depreciation Credit Resulting from a Review