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        <a class="WebWorks_Breadcrumb_Link" href="endofperiod.21.1.htm#1087633">End-of-period procedures</a> &gt; <a class="WebWorks_Breadcrumb_Link" href="endofperiod.21.2.htm#1087633">Month-end procedures</a> &gt; Task&nbsp;7:&nbsp;Record depreciation</div>
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      <blockquote>
        <div class="hms_StepModuleHeading">Task&nbsp;7:&nbsp;<a name="1087633">Record depreciation</a></div>
        <div class="b_Body"><a name="1087636">Your company’s vehicles and equipment lose value each year. </a>Part of the cost of vehicles and equipment can be allocated as an expense to your company each year you benefit from their use. The allocation of the cost of a piece of equipment over its useful life is called <span style="font-style: italic;">depreciation.</span> </div>
        <div class="b_Body"><a name="1087637">There are several methods of recording depreciation. Consult </a>your accountant to see which method is best for you.</div>
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          <span class="N_007eNoteCautionWarning">note : </span><a name="1124543">&nbsp;</a></div>
        <div class="bnL_NoteBodyLast"><a name="1124544">If you depreciate your assets at the end of the financial </a>year, make this step a part of your end<span style="font-family: &quot;Microsoft Sans Serif&quot;;">-</span>of<span style="font-family: &quot;Microsoft Sans Serif&quot;;">-</span>year routine. Consult your accountant for information about when to depreciate your assets.</div>
        <div class="b_Body"><a name="1087638">Your MYOB software doesn’t calculate depreciation </a>automatically, but you can record your depreciation figures with a journal entry.</div>
        <div class="hp_ProcedureHeading" onclick="WebWorks_ToggleDIV(WebWorksRootPath, &quot;wwdd1087640&quot;);">
          <span class="N_007eProcBullet"></span><a name="1087640">To record depreciation</a><script type="text/javascript" language="JavaScript1.2">WebWorks_WriteArrow(WebWorksRootPath, "wwdd1087640", false);</script></div>
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        <div class="b_Body"><a name="1087641">Before you can record depreciation for an asset, you need to </a>create an asset account and an expense account for each type of asset you depreciate. You only need to create these accounts once.</div>
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                <div class="bs_BodyStep_inner"><a name="1087642">Create a new asset account for each type of asset you </a>depreciate. Add the words ‘Accum Dep’n’ (for Accumulated Depreciation) at the end of each new account name. Give the new account a number that allows it to come after its corresponding asset account in the accounts list. For more information on creating a new account, see <span class="l_Link"><a href="companyfile.4.6.htm#1091659">Setting up accounts</a></span>.</div>
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        <div class="bsc_BodyStepContinued"><a name="1087647">In the following example, we have a header account, </a><span style="font-style: italic;">Motor </span><span style="font-style: italic;">Vehicles - Company Vans</span> numbered 1‑2300, and a detail account <span style="font-style: italic;">Company Vans - At Cost) </span>numbered 1‑2310. We have created a new asset account called <span style="font-style: italic;">Company Vans - Accum </span><span style="font-style: italic;">Dep’n </span>numbered 1‑2320<span style="font-style: italic;">. </span>Notice that the header account shows the current book value of the van.</div>
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                <div class="bs_BodyStep_inner"><a name="1087657">Create a new expense account. You may want to call it </a><span class="ei_EmphasisItalic">Depreciation</span>.</div>
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                <div class="bs_BodyStep_inner"><a name="1087658">Once you’ve determined your depreciation amounts, make </a>journal entries to credit the new accumulated depreciation asset accounts (for example, the <span style="font-style: italic;">Company Vans - Accum Dep’n</span> account) and debit the new depreciation expense account. The accumulated depreciation asset accounts will always have a negative balance to show a reduction in the value of the depreciable assets.</div>
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        <div class="href_ReferenceBlockHeading"><a name="1134455">Related Topics</a></div>
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                  <span style="color: Gray;">■</span>
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                <div class="bbi_BulletedIndented_inner"><span class="l_Link"><a href="endofperiod.21.10.htm#1104153" name="1134459">Task&nbsp;8:&nbsp;Lodge your activity statement (BAS or IAS)</a></span></div>
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                  <span style="color: Gray;">■</span>
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                <div class="bbi_BulletedIndented_inner"><span class="l_Link"><a href="endofperiod.21.16.htm#1087881" name="1134463">Enter end-of-year adjustments</a></span></div>
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                  <span style="color: Gray;">■</span>
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                <div class="bbi_BulletedIndented_inner"><span class="l_Link"><a href="endofperiod.21.2.htm#1093078" name="1134467">Month-end procedures</a></span></div>
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