Question

QUESTION 11
Easter Corporation purchased a new manufacturing building during the current year. The building has an estimated useful life of 30 years. The appropriate
year-end adjusting entry would be
O A. Debit Depreciation Expense and credit Accumulated Depreciation
O B. Debit Accumulated Depreciation and credit Building
OC. Debit Depreciation Expense and credit Building
OD. Debit Building Expense and credit Cash​

Answer 1

Easter Corporation purchased a new manufacturing building during the current year. The building has an estimated useful life of 30 years. The appropriate year-end adjusting entry would be Debit Depreciation expense and credit Accumulated depreciation.

Explanation:

With time the value of the fixed asset reduces due to wear and tear, This reduction in the value is called Depreciation.

At the end of year the adjusting entry would be like this, we will debit the depreciation expense account and credit the accumulated depreciation account.

When we debit the depreciation account it will be shown in the income statement as an expense on the debit side and on the other hand the accumulated depreciation will appear in the balance sheet as a contra account . This will reduce the amount of fixed asset i.e building.