Journal Entry for Depreciation

At the end of each period, a company must make an adjusting journal entry to record depreciation for any fixed assets. In this journal entry, depreciation expense is debited and accumulated depreciation is credited. Depreciation expense goes on the Income Statement and affects the company's profit. Accumulated depreciation goes on the Balance Sheet and is a contra-asset; it is subjected from property, plant, and equipment and thus decreases total assets. If the company disposes of any property, plant, and equipment, it must debit the accumulated depreciation account to eliminate any depreciation associated with the asset that is being discarded or sold.—
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