Accounting for depreciation typically involves which journal entry?

• A. Dr Depn Charge (SPL); Cr Acc Depn (SFP)
• B. Dr Asset; Cr Depn Charge
• C. Dr Acc Depn; Cr Cash
• D. Dr Cash; Cr Revaluation Reserve

Answer: (A)

Depreciation is recognised as an expense for the period and also as a reduction in the asset’s carrying amount through accumulated depreciation. The correct journal entry debits Depreciation Expense (Debit the expense line in the income statement) and credits Accumulated Depreciation (a contra-asset on the balance sheet). This pairing shows the cost of using the asset in the current period while simultaneously reducing the asset’s net book value over time.

Other approaches would distort the accounts. Debiting the asset would increase the asset value instead of recording the expense and the corresponding reduction in value. Debiting cash would imply a cash outflow for depreciation, which isn’t the case since depreciation is non-cash. Involvement of a revaluation reserve isn’t part of routine depreciation, which is about expense recognition and accumulating depreciation, not revaluation movements.