Question

In depreciation, why is depreciation expense pair with accumulated depreciation ? I mean why could not...

In depreciation, why is depreciation expense pair with accumulated depreciation ?

I mean why could not it directly deduct the equipment?

just like supplies :  supplies expense

supplies

  

Homework Answers

Answer #1

Historical Cost method is one of the important Generally accepted accounting Principle.

As per Historical Cost, The asset of a business has to be recorded in balance sheet at Original Cost and any depreciation expense on the asset is to be added to accumulated depreciation and the accumulated depreciation is shown as a deduction in the balance sheet.

Why not supplies follow above rule?

Supplies is a current asset which means they are used within a short period of time and doesn't have physical existence once they are used but fixed asset have a physical existence even after they are used, even though the purpose of the both assets is to bring in economic value to the business.

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