Amoritization and Depreciation.. With regard to balance sheet, they represent reduction in assets (LHS- left hand sided), what is the countering RHS? In other words, to balance the balance sheet, what part of equity or liabilities are deducted? Thanks in advance, FishSauce
If you're going to reduce your assets, you increase your ammortization expense which flows through retained earnings.
If I remember my univ accounting course correctly, both are on the LHS. Depreciation goes to decrease your capital assets. Since this message board doesn't allow tabs for formatting, a > will indicate a tab. ex. ASSETS >Cash $10000 >Accounts Rec $20000 >Capital Assets $180000 >>Less accumulated amortization ($34000) >Goodwill $10000 TOTAL ASSETS $186000 Remember that you do your Income Statement first before your Balance Sheet. Depreciation is an expense. The end result should show up on RHS as less Retained Earnings in your Equity to make it balance. Someone correct me if I'm wrong. It's been 3 years since my course. DNAJ65000
Formatting is all explained here : http://www.elitetrader.com/vb/misc.php?s=&action=bbcode Code: ASSETS Cash $10000 Accounts Rec $20000 Capital Assets $180000 Less accumulated amortization ($34000) Goodwill $10000 TOTAL ASSETS $186000 It's been 30 years since mine, so whatever you say is fine by me.