Assets & depreciation · Level: Exam
Journal entry: Straight-line depreciation at year end
The loss in value is spread evenly over the useful life: the same amount each year, an expense that reduces the asset.
Worked example
Office equipment was bought at the start of the year for £14,300.00 net. Useful life 13 years, straight-line depreciation. Book the depreciation at the end of the year.
Correct journal entry
Depreciation £1,100.00 / Office equipment £1,100.00
Debit
Depreciation£1,100.00
Credit
Office equipment£1,100.00
Why?
- Depreciation: expense incurred → debit
- Office equipment: asset decreases → credit
Calculation
- Depreciation per year: £14,300.00 ÷ 13 = £1,100.00
Typical mistake
Depreciating the gross cost or using the wrong useful life.
Your turn
Three problems on exactly this case, with different numbers. Amounts work with or without separators, e.g. 2,400.00 or 2400.
Transaction
Office equipment was bought at the start of the year for £4,000.00 net. Useful life 10 years, straight-line depreciation. Book the depreciation at the end of the year.
Debit
Assets up · expenses · liabilities down
Total debit£0.00
Credit
Liabilities up · income · assets down
Total credit£0.00
Frequently asked questions
What is the journal entry for straight-line depreciation at year end?
Example: Depreciation £1,100.00 / Office equipment £1,100.00.
How do I recognise this case?
The loss in value is spread evenly over the useful life: the same amount each year, an expense that reduces the asset.
What is the typical mistake?
Depreciating the gross cost or using the wrong useful life.