journal entry and the definition of depreciation, balance sheet.

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Depreciation is the allocation of the cost of an asset over its useful life, recorded in a journal entry and reflected on the balance sheet.

Depreciation is a non-cash expense that reduces the value of an asset over time.
It is recorded in the journal entry by debiting Depreciation Expense and crediting Accumulated Depreciation.
The balance sheet reflects the accumulated depreciation as a contra-asset account, reducing the carrying amount of the asset.
Example: A company purchases a machine for $10,000 with a useful life of 5 years. Each year, $2,000 would be recorded as depreciation expense.
Example: After 3 years, the balance sheet would show Accumulated Depreciation of $6,000, reducing the machine's value to $4,000.

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