a. What is the classification of the Accumulated Depreciation account? b. Which two accounts are affected by an adjusting entry for depreciation?

a. What is the classification of the Accumulated Depreciatio

For each separate case below, follow the three-step process for adjusting the accumulated depreciation account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Accumulated Depreciation. The Krug Company’s Accumulated Depreciation account has a $13,500 balance to start the year. A review of depreciation schedules reveals that$14,600 of depreciation expense must be recorded for the year. b. Accumulated Depreciation. The company has only one fixed asset (truck) that it purchased at the start of this year. That asset had cost $44,000, had an estimated life of five years, and is expected to have zero value at the end of the five years. c. Accumulated Depreciation. The company has only one fixed asset (equipment) that it purchased at the start of this year. That asset had cost$32,000, had an estimated life of seven years, and is expected to be valued at $4,000 at the end of the seven years.

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a. The $\textbf{Accumulated Depreciation}$ account is a contra asset, this means that the balance of the $\textbf{Accumulated Depreciation}$ reduces the value of its affiliated asset account. Contra asset accounts have a credit normal balance, the opposite of an asset account.