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Accounting for Beginners #60 / Accumulated Depreciation / Contra Asset / Accounting Basics - YouTube
Channel: CPA Strength
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yo yo yo what's going on rain hey you
know it is CPA strength strongest CPA in
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the state of Florida licensee fear that
is what do you do over your CP in
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strength what do you do I teach the
world accounting by the basic building
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block by building block by building
blocks you know what I'm saying this
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happens to be your first time here
welcome hope to see you again why I got
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something for you to do check out this
playlist right here it is the best
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accounting playlist in the world I
guarantee that in it's always evolving
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more and more every day like a genie
bottle rub it dreams come true enough
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said about that let's get into today's
action what today's action this is my
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classic series to class all love a good
classic series this is my classic series
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accounting for beginners this is number
60 this is a 60s installment right after
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59 right before 61 it's so special it's
got its own video number 60 so specially
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by little video what are we doing in
number 60 we're doing accumulated
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depreciation we're talking about
accumulated depreciation we're talking
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about what is it where does it show up
in the balance sheet what's the deal
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with it like Lex it all about I took a
picture I went on the internet and HTT
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path slash forward slash Google search
something go to my photos so here's what
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I did now how much I do a split screen
of what I'm looking at on my phone here
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you know this is the foot one of the
first balance sheets that I came up
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across when I searched balance sheet in
Google search so you can search a
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balance sheet and try this out
just search a balance sheet on Google
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and look try a different one that's not
this Blue Lagoon water resort park I
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just want you to notice that on this one
on one that you pull up at all my
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examples and on every other example you
will see it's always going to be assets
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equal liabilities plus equity now out
now we're going to zoom into this this
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is my mapping system DC a blur debit
credit etc experience liability equity
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revenue if an asset is going up in value
or increasing it's going to be debit if
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an asset is decreasing it would be a
credit accumulated depreciation is a
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contra asset that's the first thing I
have a my lord
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it's a contra asset that's what that's
what you would need to remember because
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you already know very no DCA's or
because you've been writing that on on
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your paper every day forever and then
you see something about depreciate a
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cumulative preciate or make a journal
entry with depreciation expense and you
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don't know what's going on or you have a
question about accumulate depreciation
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you don't know what's going on if you
can if you can remember accumulated
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depreciation as a contra asset you know
that you don't even have to remember a
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cut it's called contrast and you can
just remember that it's seen in reason
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they call it contrasted contrary to what
normally happens normally normally you
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have a if it's if it's increasing you
have a normal balance of an asset of a
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debit
now with the contra asset of accumulated
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appreciation I think if team on a
depreciation might be the only contra
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asset out there I'm sure there's other
ones but still when I can think of it
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it's the most prevalent one so let up so
the contra asset
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contrary to normal ones it is a positive
credit balance but cons it's to contrast
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against contrary to normal
posit is a positive credit it's a
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positive credit the positive credits a
contra asset
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set contra what's that for the 30 men
unconscious game left left left a up
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down the select B LT effect this balance
sheet here let's get back to this barrel
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cheat now you notice on 90 notice miss
balance sheet look at the bottom assets
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46 9 $491 950 and that equals
liabilities and equity which is 46
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million 491 950,000 so as you can see
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assets equal liabilities plus equity and
that is on that is the ballot that is
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the valid sheet and you can see they
equals so these entity one of the reason
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DC are so handy because it has the
balance sheet in it assets equal
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liabilities plus equity so I want you to
see that that equal to o is going to
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equal assets are always an equal
liabilities plus equity now let's look
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over on the asset side I just want
what's go to the opposite side has
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current assets under current assets it
has investments under that property
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equipment then under that what property
being equipment they have I label I
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label my my balance sheet fixed asset or
and they have theirs property equipment
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doesn't really the differences a small
difference their land building
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furnishings and equipment then they
after that they have less accumulated
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depreciation and they subtract that that
means less they subtract the humid
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appreciation from the rest of the
property equipment and then they get net
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property equipment so if you're looking
at this in a glance you can see the the
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book value or the net you know the net
value of the property plant equipment
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or the fixed assets you can you can
glance at that they don't tally them up
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but let's see you you would be able to
see that the lamp the property equipment
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you know was bought for 30 36 million
there is a four and a half million of
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accumulated depreciation so the net 32
million you know so there's 32 million
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you know land is not depreciable so you
would so you could subtract that by the
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net so it's at 25 25 25 million more to
depreciate on on those assets notice I'm
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just saying you know what I see on this
balance sheet and so that's that's
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accumulated depreciation when you know
in a company is I just want to show you
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a balance sheet that you could find from
anywhere enough of that
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I'll get it's really digging to
accumulate depreciation read my board
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right and stay focused
so I already told I've already went over
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to contracts that blah blah blah yeah
it's contrary because it's a credit to
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credit it's like it's in the credit for
positive what's the journal entry for
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the stimulus appreciation when are you
going to see to like appreciation when
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you going to run along a particular
depreciation when let's think about what
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cumulated depreciation is this
depreciation that accumulates you have
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depreciation from one year depreciation
expense it sits in your accumulated
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depreciation pile you have depreciation
expense in another year and it goes in
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the accumulation to pile every
depreciation expense goes over to
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accumulated depreciation as well so in
eight cumulates it keeps going up and up
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and up every year the journal entry I
believe unless you have like some
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corrective inch I mean I ninety-nine
point nine of your I'm reliable in here
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and if I'm wrong let me know if you
think you're going to current not like
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not a correct
but this is going to be your journal
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entry here so if you have depreciation
or accumulated depreciation and you
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don't know anything this is me oh this
is going to be the journal entry you're
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going to debit depreciation expense so
sleep so this one you have debit
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depreciation expense 1,000 create
accumulated depreciation of a thousand
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that's going to be the journal entry you
can have a debit depreciation expense
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crediting accumulated depreciation
why is it like that because you're you
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are expensing your expensing the asset
via depreciation expense I'm going to
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answer an unknown over there going to be
out of their mind so this will be the
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journal journal journal entry for
accumulated depreciation so if you can't
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remember here the journal entry or it's
a contra asset I want you to think about
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so I just showed you the balance sheet
before so I want you to think about what
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what is what it's doing what accumulated
depreciation is doing so I have on my
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belt just a balance sheet here 1231 16
assets I have winter assets I have fixed
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assets under the face assets I have a
truck for a salad for $5,000 so I know
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if I see that on the balance sheet
I know assets I know out sets on the
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balance sheet I hope balance sheets
asset to liability select me if I see
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that I know it's five o'clock I know it
was worth $5,000 when it was purchased i
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was the purchase price then i see human
a depreciation - two thousand dollars on
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the balance sheet so I not have total
fixed assets of three thousand dollars
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now you say whoa
time out time out time out you think you
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thought you got me out so right you're
right here this journal entry is only
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for $1000 you know this was for this
year this was in 20 this was a 2016
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journal entry right for $1000 so now if
on the balance sheet it has $2,000 to
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accumulated depreciation this is my the
balanced on top but you'd be thinking
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at there was probably you know this
truck was not bought during this year
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because the depreciation expense this
year was a thousand dollars because
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you'd look right under the balance sheet
the income statement see what was the
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differentiation expense for this year
was only a thousand dollars why has
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accumulated depreciation two thousand
dollars
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well they had a thousand dollars from a
prior year sort of cumulate so it's
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totaled
two thousand dollars okay so the truck
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has three thousand dollars left
appreciations probably got a couple more
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years of depreciation left so you can
glean glean all that or whatever from
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looking at the balance sheet for a
couple seconds and that's kind of why
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it's done like that now to have a
negative on the balance to have a
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negative a negative amount on the
balance sheet for assets is is rarey
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already then we also want to tell you
the CRA children or depreciation expense
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and keenly depreciation are like you're
like biffle's best friends forever
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forever they're always together I don't
think you're going to see one without
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the other
ever there biffle's oh you're going to
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being journal entries together and this
was the definition in the book
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accumulate depreciation is the contra
asset account credited when recording
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the depreciation of a fixed asset that's
a definition of the book let's try to
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make this a short one and one really
long again it's all about accumulate
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depreciation thank you for watching this
is going to be the end of the video I
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hope to see you for the next one in 61
if you liked it please like like share
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subscribe share it's accounting
knowledge with other people don't be
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stingy and don't be stingy try to stay
positive don't be a hater until the next
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time let's go
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