Depreciation expense is recognized in the accumulated depreciation account and is charged to the cost of the asset or to current profit or loss, depending on the purpose.
The accumulated depreciation account is an asset-based allowance adjustment account, and its structure is just the opposite of that of a general asset account; accumulated depreciation is credited to register an increase and debited to register a decrease, with the balance on the credit side. Accumulated depreciation refers to the cumulative amount of depreciation of fixed assets extracted by the enterprise at the end of the reporting period in each year. This indicator is based on the accounting "balance sheet" in the "accumulated depreciation" item at the end of the period.
The depreciation of buildings, machinery and equipment used in the production plant, as an overhead cost, charged to the manufacturing overhead account, the factory administrative office building, charged to the overhead account, covered by the current income. The total depreciation is credited to the "accumulated depreciation" account.
Difference between accumulated depreciation and provision for impairment of fixed assets
Provision for impairment of fixed assets and depreciation is an important part of fixed asset accounting. From the content of the balance sheet, "accumulated depreciation" and "fixed assets impairment allowance" are "fixed assets" of the allowance item, both complement each other. ***The same reflects the decrease in the book value of fixed assets.
Both the provision for impairment and depreciation, to varying degrees, reflect the principle of prudence in the correct calculation of profit and loss, reduce the risk of loss, and reasonably determine the value of the compensation scale.
In practice, people tend to think that accumulated depreciation has been expressed in the impairment of the value of fixed assets, and then the provision for impairment of fixed assets seems redundant and repetitive, the two are different in nature, the purpose is completely different.